Mortgage rates reach 7.49% as housing experts share expected market changes
Bloomberg reported that U.S. mortgage rates reached 7.49%, the highest level since 2023. Housing and mortgage experts explain changes they expect the rate environment to bring over the next 6–12 months.
Edited by Adrian James, Editor at Featured News · Roundup by Featured · Oct 9, 2026
Bloomberg reported that U.S. mortgage rates reached 7.49%, their highest level since 2023.
We asked housing-market and mortgage professionals to identify changes they expect this rate environment to bring for buyers, sellers or lenders over the next 6–12 months.
Roundups
What I’m seeing is that higher mortgage rates are creating two very different housing markets. Many of the 55+/Active Adult and downsizing buyers I work with are coming from homes that have been either fully paid off or they have substantial equity and some are able to buy with cash or a large down payment. Those buyers are much less affected by an increase in mortgage rates than buyers who are putting 20% or less down payment. Over the next 6 to 12 months, I expect that difference to become more noticeable. Homes that appeal to downsizers with lots of equity and cash buyers can still see strong demand, while homes that depend primarily on financed buyers may require more aggressive pricing or seller concessions. I also expect builder incentives and rate buydowns, and I already see that, to become increasingly important because many financed buyers care more about the monthly payment than a relatively small reduction in the purchase price.
Rates are going up to slow down inflation, which has been running hot for years, eroding purchasing power for consumers through higher prices on just about everything. Consumer budgets are exhausted, and under stress. Higher rates drive up borrowing costs in just about every lending segment and higher savings rates encourage consumers to save money instead of spending it. The slowdown in demand will drive down inflation but it will take 6-12 months. As prospective homebuyers pull back during this higher rate cycle, I don't think we will see a noticeable decrease in home prices, but we will see a big shift in negotiating power favoring home buyers. Prospective home buyers shouldn't back out of the market just because rates are up and home prices aren't dropping. Historically, some of the most profitable moves in real estate have been against the trend, and this is one of those times home buyers have that exact opportunity.
Rates being at 7.49% will allow buyers to sit on the fence and shop around with us for the best option whether it be conventional FHA VA or Jumbo. As we start to see more inventory available on the market home will sit longer and allow sellers to give more towards closing cost. Using programs such as Home Plus AZ or Home in Five Advantage can help your buyers get closed on their next home faster. Another thing we have noticed is the increase of using one time close loans. These loans will allow your buyers to get locked into one rate when they start building their home and only draw on what they use during the building process. Something that I have noticed that was unexpected was more buyers wanting to use 1099 loans on there primary residence. With these loans you only need to put down 10-20% and do not need to provide tax returns but can use bank statement's or P&Ls.
The housing market has definitely slowed in our area because of interest rates, inflation (which is driving gas and food prices up), and the uncertainty around the war in Iran. Buyers have the upper hand right now and can negotiate much more on price, ask for closing costs, and many are getting an Old Republic Home Warranty included in their contract. It has taken a little more explaining for sellers to understand this because they are still expecting to get what their neighbors sold their house for a few months back, when interest rates were more than half a point lower than they are today.
Experts featured here are members of Connectively or HARO, Featured’s expert networks.