Why this matters:When real estate agents check out readily available market data, they improve their ability to advise clients. Today’s deepening of uncertainty about all factors driving California property values is best tackled by continuously reviewing information for insight into the present non-stop change in human behavior affecting real estate transactions.
The cyclical rise in mortgage rates bent by wars
The rate on an average 30-year fixed rate mortgage (FRM) lifted to 6.66% in the week ending July 31, 2026, rising to equal rates one year ago. The average 15-year FRM rose to 6.04%.
For those able to switch, the lower 15-year FRM delivers a huge increase in household wealth due to the significant decrease in the amount of interest paid over the life of a 15-year mortgage. While one-eleventh less expensive, the 15-year FRM larger amortization payments pay off the principal more quickly.
Originating a 15-year FRM, say $500,000, rather than a 30-year FRM, saves around 60% on the total interest paid on a 30-year FRM. This means a 30-year FRM costs more than double the amount of interest paid on a 15-year FRM. This avoidable expense when continued after 15 years drastically reduces the homeowner’s standard of living.
For 2026, you, in a guessing game, may well see FRM rates work their way higher then lower, or, lower then higher. The bond market bet is the Fed will put up a verbal fight to cut the current severe 3.5% to 4% average rate of consumer inflation, a repeat of the Nixon/Burns Fed chaos of 1971.
Further, the tariff wars since early 2025 and military wars in 2026 destabilized job growth and increased consumer inflation which will not end quickly.
And, meanwhile, the effects of government interference with necessary trade and migratory labor remain from the covid pandemic and current administration. This environment drives hoarding of precious metals or cash positions, but not the acquisition of real estate interests. Not yet, but certain to come.
Meanwhile, the prices of income producing assets (read: real estate, bonds, etc.) decline and wages for the employed increase to match recent consumer inflation, the COLA effect.
However, it is the dramatic increase in long-term rates for mortgages, which remain steadfastly high, that has brought mortgage-funded real estate transactions to a serious slowdown until the interferences recede.
Regardless of FRM rate movement in the continuing real estate recessionary period now ongoing in 2026, expect a long-term upward trend in mortgage rates to follow — though they will drop for the duration of a recession. The trend commenced in 2013 with the onset of a half-cycle of rising long-term rates for borrowing and is likely to run for most of two more decades.
That said, current government interference adversely affects homebuyer willingness, user turnover rate, and costs of residential construction. Thus, a rigor mortis environment for real estate has settled in with buyers, sellers and lenders.
An increase in federal tax revenues is needed to offset an insatiable government demand for cash, unless those who pay income taxes pay more. The result: expect long-term interest rates to remain high, and in sympathy, mortgage rates.
Two further situations may take place to cause mortgage rates to stay high and tend to rise. Privatizing quasi-government mortgage agencies, like Freddie Mac, enhances mortgage lender profit-sharing due to reduced oversight but provides greater short-term profits. The tandem follow on is mortgage lender losses are socialized and thus paid by government mortgage guarantees and not borne by the lenders.
Remember the rule: All financial deregulation goes up in flames. Our last reminder was 2005 which did not go well, but we forget.
Buyers increasingly stay away, until when?
Today, property prices are undermined by high FRM rates and buyer caution. For investors, all income property values decline because capitalization rates rise in sympathy with long-term interest rates. Of course, the cost of a higher yield-spread is borne as a loss of wealth by current owners of real estate, not mathematically astute buyers.
In application, property pricing is primarily supported by the amount a buyer can borrow to fund a purchase. Higher and higher mortgage rates translate into reduced ability to pay yesterday’s asking prices.
The annual increases in FRM rates force sellers to eventually drop prices or exit the for-sale market as for-sale and for-lease inventories rise.
As for homebuyers dependent on purchase-money mortgage funding, and particularly first-time buyers under the age of 35, they either:
- reduce their standard of living and acquire property priced in a lower tier, a less likely choice going forward; or
- wait out dropping or static property prices until pricing matches their reduced buyer purchasing.
Buyers dependent on mortgage funding increasingly sense property acquisition today is incompatible with the double whammy of purchasing an over-priced property with mortgage funding at high FRM rates. Rational potential buyers increasingly remain on the sidelines — ready and able, but less willing to borrow and buy.
Fundamentally, FRM rates are tied to the 10-year Treasury note market, as are capitalization (cap) rates for setting income property prices. The 30-year FRM rate moves in tandem with the 10-year Treasury note rate, to which MLOs add a risk premium of between 1.5% and 3.0% based on a perceived risk of loss on mortgage defaults. Historically, the risk premium spread between the 10-year T-Note rate and the 30-year FRM rate in normal times is 1.5%. The spread is far greater for property investor cap rates to set property value.
The 10-year T-Note shot to 4.74% on July 31, 2026. The spread between the 10-year T-Note and 30-year FRM rate is 1.92%, above the historical risk premium spread of 1.5%.
The average monthly rate on adjustable rate mortgages (ARMs) increased to 6.43% on July 31, 2026.
The interest rate on the ARM is well above the 15-year FRM and only 23 percentage points lower than the 30-year FRM rate. A positive 30-year ARM-to-FRM spread gives a homebuyer or owner a bump in the amount they can borrow by taking out an ARM.
The downside in this reach for more funding through a non-conventional (predatory) mortgage is the significant forward risks of loss-by-foreclosure inherent in ARMs when rates trend higher or an employment recession sets in. Unchanged, an ARM is the mortgage available to finance the risk-tolerant cohort of high-tier housing and commercial property buyers and owners.
The following was updated July 31, 2026.
Click the link to go directly to a chart, or browse the charts by scrolling below.
1. 30-year fixed rate mortgage (FRM) rate, weekly— Chart update 7/31/2026
2. 30-year FRM rate, monthly — Chart update 7/31/2026
3. 15-year FRM rate — Chart update 7/31/2026
4. 5/1 adjustable rate mortgage (ARM) rate, monthly — Chart update 7/31/2026
5. 10-year Treasury note rate — Chart update 7/31/2026
6. Combined FRM and 10-year Treasury note rates — Chart update 7/31/2026
7. 91-day Treasury bill rate — Chart update 7/31/2026
8. 3-month Treasury bill — Chart update 7/2/2026
9. 6-month Treasury bill — Chart update 7/2/2026
10. Treasury Securities average yield (CMT) — Chart update 7/2/2026
11. 12-month Treasury average — Chart update 7/2/2026
12. Secured Overnight Financing Rate (SOFR) — Chart update 7/31/2026
13. Applicable federal rates — Chart update 7/31/2026
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| Chart update 7/31/26 | ||
Current | Month ago 7/2/26 6.43% | Year ago 7/31/25 6.72% |
The average 30-year FRM rate in California is provided by the St. Louis Federal Reserve Bank.
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| Chart update 7/31/26 | ||
July 2026 Average 6.54% | June 2026 Average 6.49% | July 2025 Average 6.72% |
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| Chart update 7/31/26 | ||
Current 7/31/26 6.04% | Month ago 7/2/26 5.79% | Year ago 8/1/25 5.85% |
The average 15-year FRM rate in California is provided by the St. Louis Federal Reserve Bank.
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| Chart update 7/31/26 | ||
July 2026 6.37% | June 2026 5.77% | July 2025 6.01% |
The 5/1 average adjustable rate mortgage (ARM) rate shows the average rate for the first five years after origination. After the initial five-year period, the ARM rate is adjusted annually based on an index figure, such as a certain Treasury Bill rate (which reflects Federal Reserve rate movements) or the Secure Overnight Financing Rate (SOFR). The average ARM rate is provided by Freddie Mac’s survey of the U.S. | ||
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| Chart update 7/31/26 | ||
Current 7/30/26 4.74% | Month ago 6/26/26 4.37% | Year ago 8/1/25 4.24% |
This rate is a leading indicator of the direction of future Freddie Mac rates. The 10-year rate historically runs closer to 4% during a stable money market. The rate is influenced by worldwide demand for the dollar and anticipated future domestic inflation. | ||
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| Chart update 7/31/26 | ||
Avg 15-year July 2026 5.91% | Avg 30-year July 2026 6.54% | Avg 10-year T-Note July 2026 4.59% |
The average 15- and 30-year conventional commitment rates are the rates at which a lender commits to lend mortgage money in the United States-West/California for the duration of the life of each respective mortgage as reported by Freddie Mac. The green line reflects the 10-year Treasury Note Average, a leading indicator of the direction of future Freddie Mac rates. It is composed of the level of worldwide demand for the dollar and anticipated future domestic inflation.
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| Chart update 7/31/26 | ||
Current 7/31/26 3.91% | Month Ago 7/2/26 3.83% | Year Ago 7/31/25 4.34% |
This rate determines the minimum interest rate the seller must use in a delayed §1031 transaction and report when not receiving interest on §1031 monies held by a facilitator/accommodator. This rate also sets the amount of the ordinary income the facilitator/accommodator must report. | ||
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| Chart update 7/2/26 | ||
June 2026 3.66% | May 2026 3.60% | June 2025 4.23% |
The 3-Month Treasury Bill rate is heavily influenced by the Federal Reserve through the Fed Funds Rate as the base price of borrowing money in the short-term. It is used in determining the 3-month:10-year yield spread used to predict the likelihood of a recession one year forward. The posted rate is the monthly average for the listed month. Rates are released with a one-to-two month reporting delay.
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| Chart update 7/2/2026 | ||
June 2026 3.73% | May 2026 3.62% | June 2025 4.14% |
The six-month T-Bill rate is one of several indices used by lenders to periodically adjust the adjustable rate mortgage (ARM) rate. The adjusted rate equals the indexed rate (at the time of adjustment or an average of several prior rates) plus the lender’s profit margin. The posted rate is the monthly average for the listed month. Rates are released with a one-to-two month reporting delay. | ||
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| Chart update 7/2/26 | ||
June 2026 3.91% | May 2026 3.79% | June 2025 4.06% |
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. The ARM interest rate equals T-Bill yield, plus the lender’s profit margin. The index is an average of T-Bill yields with maturities adjusted to one year. | ||
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| Chart update 7/2/26 | ||
Current June 2026 3.71% | Month ago May 2026 3.72% | Year ago June 2025 4.22% |
This index is one of several indices used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. This figure is an average of the one-year T-Bill rates for the past 12 months. The ARM interest rate equals the 12-Month Treasury Average yield plus the lender’s profit margin. There is a one-to-two month lag in data reporting for the 12-Month Treasury Average. | ||
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| Chart update 7/31/26 | ||
Current 7/30/26 3.65% | Month ago 7/1/26 3.66% | Year ago 7/31/25 4.39% |
This index is one of several indices used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. It replaced the LIBOR in 2021, which was found to be manipulated in the years leading up to the 2008 recession and financial crisis. The ARM interest rate equals the SOFR rate plus the lender’s profit margin. The rate is based on overnight borrowing in the U.S. Treasury repo market. The SOFR is produced in a transparent manner and is based on observable transactions, rather than models, and, unlike the LIBOR, is not dependent on bank estimates. | ||
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| Chart update 7/31/26 | ||
Short (3 years or less) August 2026 3.06% | Medium (3 to 9 years) August 2026 3.24% | Long (9+ years) August 2026 3.66% |
These rates determine minimum interest yield reportable on carryback financing. The applicable federal rate (AFR) category is determined by the carryback due date. Rates are for monthly payments, reported for the coming month.
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It’s interesting that rates are still hovering near 7% even with the Fed holding steady. Are we seeing any regional differences in how lenders are pricing these trends?
Keeping up with trending mortgage rates helps real estate agents provide smarter guidance and make informed decisions in a constantly changing market. Staying updated allows them to better understand buyer behavior and shifting property trends.
Interesting that rates are still trending despite the Fed’s latest pause. Are we seeing more buyers lock in now or waiting for the next dip?
Very informative analysis, thanks!
** With mortgage rates trending in mid-2026, it would be helpful to see a breakdown of how these rates vary by region and loan type rather than just a national average
With mortgage rates shifting in mid-2026, it’s crucial for prospective homebuyers to track how rate fluctuations could impact affordability and long-term costs.
With mortgage rates trending this high in mid-2026, it’s clear that affordability remains the biggest hurdle for first-time buyers. I’d love to see a follow-up article breaking down how these rates compare regionally—some markets must be hit much harder than others.
With rates shifting in 2026, it’s clear that waiting on the sidelines could cost homeowners significantly more over the life of their mortgage. Would love to see a follow-up breaking down how these trends vary by state and loan type.
With mortgage rates still trending upward in mid-2026, it’s becoming increasingly important for prospective homebuyers to lock in rates early rather than waiting for potential dips that may not materialize.
Trending mortgage rates continue to shape buyer demand and housing affordability.
Trending mortgage rates matter because they directly influence buying power, affordability, and overall real estate activity. As market uncertainty continues to shape California property values.
With rates shifting in mid-2026, it’s clear that buyers need to track weekly changes rather than locking in too early—especially given the timing around June’s market adjustments mentioned in this update.