Interest Rates are Getting Spooky

Just when the fall market seemed to be settling in, interest rates decided to make things a little more interesting.

The 30-year mortgage rate crossed 7% last week for the first time since January 2025. That's a sharp turn from February, when rates briefly dipped below 6%. Meanwhile, the 10-year Treasury, which mortgage rates tend to follow, has climbed above 5.2%, its highest level since 2007, just before the financial crisis.

A little perspective helps. Seven percent feels scary because many of us got used to 3%. But the long-run average for a 30-year mortgage since 1971 is roughly 7.7%, and rates peaked at 7.79% as recently as October 2023. (If you really want a fright, ask your parents about 1981, when rates topped 18%.)

The conventional wisdom is that higher rates are bad for real estate. Over the long term, that's often true. In the short term, the psychology can be very different.

Buyers who were already planning to move often become more motivated, not less. Waiting could mean a higher rate. And if rates come back down, more buyers return and prices will likely rise. Buying now can mean getting ahead of that competition.

Sellers feel it too. Higher rates can shrink the buyer pool, so sellers who need to move tend to price more realistically and become more flexible on price, contingencies and terms.

Both sides are responding to the same fear from opposite directions, and that can create a window of opportunity.

For buyers, the question isn't just "Where are rates today?" It's "What happens to prices and competition when rates fall?" For sellers, it's "What happens to my buyer pool if rates keep climbing?"

So yes, interest rates are spooky. But in real estate, what scares everyone else is often exactly what creates the opportunity.