30-year mortgage rates hit 2-year high: What homebuyers need to know

New home buyers will face higher payments now that the 30-year-mortgage loan rate surpassed the 7% interest mark. 

It is the first time since the first week of President Donald Trump’s first term that the mortgage rate was above 7%, Reuters reported. NerdWallet reported that as of Tuesday, the rate had jumped to 7.16%. 

The backstory:

The Federal Reserve last week increased its benchmark interest rate to ease inflation. 

"Yields on 10-year Treasury notes that underpin mortgage rates are near the highest in two decades," Reuters reported. 

Mortgage rates rose more than a full percentage point since joint U.S.-Israeli strikes against Iran prompted a rise in oil prices in late February. Higher gas prices helped slow the housing market as prospective homebuyers worried about expenses. 

Dig deeper:

Sam Khater, the chief economist for Freddie Mac, told FOX Business earlier this month that purchase demand has remained relatively stable, which Khater said indicates "steady interest from buyers adapting to evolving market conditions." 

But just before the latest mortgage rate increase, real estate site Zillow forecast a 3.5% drop in house sales for the fourth quarter of 2026. 

In the meantime, inventory continues to build, ZIllow said, growing just over 10% year-over-year, more than twice the pace of the first quarter. That, Zillow said, should lead to "an uptick in price cuts and more options and negotiating power than they’ve had in years."

‘Date the rate, marry the home’

What to Know:

Real estate expert Tony Giordano told Fox News Live that despite the climb in rates, they have still seen an increase in home sales activity, particularly from people who have been on the fence waiting for interest rates to drop. 

"It's kind of interesting that, because they just went up, it almost gets them off the fence because they're like, ‘OK,, we're waiting for no reason. Maybe it's time to buy,’" Giordano said. "You date the rate. You marry the house. They can always refinance later."

What you can do:

He said prospective homebuyers who are qualified to purchase and can afford the payment should not wait. 

"You’re waiting for nothing," he said, adding that the U.S. is not building enough houses, which means home values are always going to increase. 

For sellers, his advice is simple: Price right. 

"You need to price under what the neighborhood has sold for to get more exposure," he said.

It’s better to list for under what your neighbor’s home just sold for to get attract more buyers. 

Meanwhile, for those not yet ready to buy, Zillow says renting remains "a compelling option and an opportunity to build savings."

Zillow noted that despite the slowdown and what it calls "a disappointing end to the year," 2026 should still improve slightly over 2025, with existing home sales projected to be up 1.2% over 2025, its site states. 

 

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