Zillow Raises Mortgage Rate Forecast to 7.1% for 2026

October 2, 2026: Zillow has raised its year-end mortgage forecast to 7.1%, up from 6.7% earlier this month, as a global bond selloff pushes yields higher. Freddie Mac's latest weekly average for a 30-year fixed loan is 7.28%, the highest since November 2023.

What changed

• 10-year Treasury yield: hit 5.1% on September 23, its highest level in about two decades, according to Zillow Home Loans senior economist Kara Ng; The Mortgage Reports showed it at 5.209% on September 28

• Earlier forecasts: Zillow had expected rates to ease to 6.7% by year-end and 6.3% by the end of 2027

• Other forecasters: mid-September outlooks from Fannie Mae and the Mortgage Bankers Association kept the 30-year rate under 7% through the end of next year, but both came out before the latest yield spike

 

Why rates could stay high

Ng said the bond market "continues to rain on the fall home shopping parade." She noted that a narrow gap between Treasury yields and mortgage rates has softened the blow, and that the gap cannot shrink much further, so the broader rise in yields is what hurts buyers. Zillow also reports that the typical mortgage payment was 2% above year-ago levels in August.

 

What buyers can do

Fall usually brings more listings and price cuts, but higher borrowing costs can erase the savings. Compare lender quotes, ask about rate buydowns, and budget for a payment at today's rates rather than waiting for a drop.