Mortgage Rates To Stay Above 7% Through 2026 -- What It Means for Buyers and Sellers
The Fed’s mid-September interest rate hike pushed the average 30-year fixed mortgage rate above 7% for the first time since January 2025.
The move made home loans more expensive than at any time in either of President Donald Trump’s two terms in office. Mortgage rates had already been rising for more than a month before the central bank bucked the White House and raised borrowing costs to tamp down inflation.
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Many analysts believe the era of costly mortgages is here to stay — at least for the remainder of 2026 — and that its consequences could be stark for both buyers and sellers.
Not only do elevated rates reduce purchasing power and increase monthly payments, but 7% also represents a grim psychological barrier that could further cool an already chilly housing market — but it doesn’t have to. MoneyLion spoke with an expert who agrees that high rates are probably here to stay, but believes that opportunities still abound, both for those looking to get into a home and for those looking to get out of one.
Relief Is Unlikely Before 2027
A Sept. 25 analysis from Norada Real Estate Investments concluded that mortgage rates are likely to remain at or above 7% for the remainder of 2026. It also noted that another increase is possible and, even without one, relief for borrowers is unlikely unless inflation subsides enough to appease the Fed in the fall and winter.
However, while the federal funds rate has the most direct influence on the cost of home loans, Fed action is not the only, or even necessarily the most impactful, factor.
“Mortgage rates are far more closely tied to the bond market and 10-year Treasury yields than to direct Fed decisions,” said Jeffrey Ruben, president of WSFS Home Lending at WSFS Bank. “While Fed actions certainly influence sentiment, long-term mortgage rates react to inflation expectations, investor sentiment and broader economic data.”
Fall Is the Slow Season
Historically, spring is the busiest season for real estate transactions, followed closely by summer. When the weather cools, so, too, does the market. However, cooling doesn’t mean freezing, and Ruben doesn’t believe the impact of rates breaching 7% will be diminished just because it happened in the offseason.
“Even in a slower period, serious buyers and sellers are still active in the market,” he said. “While elevated rates continue to create affordability challenges that may keep some buyers on the sidelines, the market hasn't come to a complete standstill.”
Should Prospective Sellers and Buyers Wait It Out?
With the Fed eyeing further rate increases and the bond market flashing glaring warning signals, both buyers and sellers might be wise to simply wait until rates fall, purchasing power increases, and both inventory and competition rise, right?
Perhaps counterintuitively, no. Attempts to predict the housing market’s whims are generally as unsuccessful as attempts to guess the stock market’s short-term behavior.
“Neither buyers nor sellers should wait and try to time the market to rate drops,” said Ruben. “Any future cut should be viewed as an added bonus for a no-penalty refinance down the road, rather than the grounds for making a decision today.”
When Is the Right Time?
Instead, Ruben counsels prospective buyers to build or maintain good credit, make timely debt payments and create a solid financial plan for navigating the current market.
“They should also consider working with a lender to make a repayment plan and explore the flexible loan options available to them, like ARMs or HELOCs that fit their budget,” he said.
Sellers should enlist a trusted advisor to establish a realistic pricing strategy that reflects current market conditions.
“They should also prepare by completing necessary pre-listing maintenance, staging the home to showcase value, and being flexible during negotiations, whether that means offering seller concessions or rate buydowns to help buyers manage their monthly costs,” said Ruben.
In the end, your budget, family situation, finances and professional needs — and not the market’s behavior — determine the right time to buy or sell a home, and if the time is right, those who are prepared can make it work.
“Consumers have proven to be resilient,” said Ruben. “And homeownership remains achievable for those who plan ahead.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.