What economists are forecasting and why Santa Cruz County real estate may respond differently than the national market.
Updated October 29, 2026
Will mortgage rates go down?
It is one of the most searched questions in real estate, and for good reason. The difference between one mortgage rate and another can materially affect a buyer’s monthly payment, purchasing power, and comfort level.
For sellers, mortgage rates can influence how many buyers enter the market, what those buyers can afford, and how carefully they evaluate each property.
The honest answer is that mortgage rates may decline, but no economist, lender, or Santa Cruz Realtor can predict their exact path with certainty.
Current forecasts are educated projections based on inflation, economic growth, Federal Reserve policy, Treasury yields, employment, and global financial conditions. When those factors change, the forecasts can change with them.
What Are Mortgage Rates Right Now?
According to Freddie Mac, the average 30-year fixed mortgage rate was 7.24% as of October 29, 2026. That was down from 7.32% the previous week and 7.40% earlier in October. One year earlier, the average was 6.17%.
The recent decline offers buyers some relief, but a few weeks of lower rates do not necessarily establish a long-term trend.
Mortgage rates can move from week to week, and the rate available to an individual buyer may differ from the national average. Credit score, down payment, loan type, points, property type, occupancy, and lender pricing can all influence the rate a borrower receives.
Are Today’s Mortgage Rates Historically High?
Today’s rates are considerably higher than the exceptionally low rates available during 2020 and 2021, but they are not the highest mortgage rates in American history.
Freddie Mac’s historical data provides helpful perspective:
- The 30-year fixed mortgage rate reached a record high of 18.63% in 1981.
- The rate reached a record low of 2.65% in January 2021.
- Rates remained below 3% for only a relatively brief period between 2020 and 2021.
- The average 30-year fixed rate was 7.24% on October 29, 2026.
The mortgage rates available during the pandemic were historically unusual. Realtor.com’s economic research notes that the period from July 2020 through September 2021 was the only time in Freddie Mac’s recorded history, which dates to 1971, when average mortgage rates remained below 3%.
That does not mean mortgage rates cannot decline again. It means buyers should be cautious about treating 2% or 3% mortgages as the standard to which every future market should return.
What Is Zillow Predicting for Mortgage Rates?
Zillow’s latest outlook suggests that mortgage rates are more likely to move down than up, but that any relief may be gradual.
As of its October 2026 forecast, Zillow expected the 30-year fixed mortgage rate to ease to approximately 7.1% by the end of 2026 and approximately 6.5% by the end of 2027.
Zillow has also emphasized that the direction of rates remains a significant wildcard. Inflation, economic growth, investor demand for long-term bonds, and unexpected changes elsewhere in the economy could produce a better or worse outcome than current mathematical models predict.
In other words, Zillow currently anticipates some improvement, but not an immediate return to the historically low rates buyers experienced several years ago.
What Are Realtor.com Economists Saying?
Realtor.com economists have also cautioned against assuming that a short-term decline will automatically become a sustained downward trend.
Realtor.com senior economist Joel Berner recently explained that the retreat in mortgage rates was connected to lower 10-year Treasury yields. He also noted that upcoming inflation and employment data will help determine whether renewed upward pressure develops.
Senior economist Jake Krimmel described the recent rate relief as a reduced obstacle rather than a major new advantage for buyers. The broader message is that lower rates are welcome, but rates remain elevated and the future path is still uncertain.
This distinction matters because mortgage rates do not move solely because the Federal Reserve raises or lowers its benchmark rate.
Mortgage rates are closely influenced by the 10-year Treasury yield, inflation expectations, economic growth, demand within the bond market, and investors’ perceptions of future risk. A Federal Reserve decision can influence those conditions, but mortgage rates do not always move in the same direction or by the same amount.
Could Mortgage Rates Remain Above 7%?
Yes.
While Zillow forecasts a gradual decline, the Mortgage Bankers Association has published a more conservative outlook.
MBA Chief Economist Mike Fratantoni expects the average 30-year mortgage rate to remain above 7% through 2027. The organization points to persistent inflation, elevated Treasury yields, government debt, and restrictive monetary policy as reasons rates may remain higher for longer.
The difference between the Zillow and MBA forecasts demonstrates why predictions should be viewed as a range of possible outcomes rather than a promise.
Credible economists can study the same economy and reach different conclusions because they use different assumptions about inflation, growth, Federal Reserve policy, and financial markets.
Why Santa Cruz County Real Estate May Respond Differently
National mortgage-rate trends matter, but they do not affect every housing market or every buyer in the same way.
According to year-to-date Santa Cruz County sales data reviewed by the Strock Team:
- 31% of all countywide residential sales were all-cash purchases, including condominiums and townhomes
- 55% of purchases above $2 million were all cash
- 67% of purchases above $3 million were all cash
- Condominiums had the highest percentage of cash buyers among the property types reviewed
These numbers provide important context for Santa Cruz real estate.
Nearly one-third of countywide buyers are not relying on traditional mortgage financing. At the higher end of the market, cash represents the majority of purchases.
For an all-cash buyer, a higher mortgage rate does not directly increase a monthly loan payment or affect their ability to qualify for financing. This can help certain parts of the Santa Cruz County market remain active even when rising borrowing costs reduce demand elsewhere.
The effect becomes especially significant in the luxury market. With 55% of purchases above $2 million and 67% of purchases above $3 million completed with cash, mortgage rates may have less direct influence on many higher-priced transactions.
Cash buyers are not completely unaffected by interest rates. Higher rates can still influence investment decisions, consumer confidence, and the return a buyer could earn by keeping their money elsewhere. However, they are less directly exposed than buyers whose monthly payment and purchasing power depend on mortgage pricing.
This helps explain why certain Santa Cruz homes, Aptos homes, luxury coastal properties, and condominiums can continue to attract serious interest despite elevated rates.
It also reinforces why national housing headlines rarely tell the complete local story. Ben Strock and the Strock Team evaluate activity at the neighborhood, property, and price-point level because mortgage rates can significantly affect one segment of the market while having a much smaller influence on another.
Why Do So Many Santa Cruz County Buyers Pay Cash?
Santa Cruz County attracts several types of cash buyers.
Some are longtime homeowners who have accumulated substantial equity and are selling a property in another high-value California market. Others are downsizing, purchasing a second home, relocating from Silicon Valley, investing, or choosing to buy without financing for greater certainty and negotiating strength.
A buyer moving from a higher-priced property may be able to purchase an Aptos home or Santa Cruz home using proceeds from a previous sale.
The prevalence of cash purchases does not mean every property will sell quickly or receive multiple offers. Location, condition, insurance availability, presentation, price, and buyer demand still matter.
It does mean the local market may be less sensitive to mortgage-rate movements than markets where nearly every buyer requires financing.
Should Buyers Wait for Mortgage Rates to Go Down?
Waiting may make sense for some buyers, particularly if their finances, employment, down payment, or monthly budget are not ready.
But waiting solely for a specific mortgage rate carries its own risks.
Consider a buyer searching for an Aptos home. At today’s rate, the monthly payment may be higher than they would prefer. However, the property may also have fewer competing buyers, and the seller may be more open to negotiating the price, closing costs, repairs, or a credit toward a temporary or permanent rate buydown.
If mortgage rates decline later, the buyer’s purchasing power could improve. But the same decline may bring additional buyers back into the market, creating more competition for desirable Aptos homes and Santa Cruz homes.
A lower mortgage rate does not automatically mean a lower total cost if the buyer must pay more for the property or compete against multiple offers.
Neither outcome is guaranteed. The point is that the mortgage rate is only one part of the purchase.
The more useful questions are:
- What is the monthly payment at today’s rate?
- Is the payment comfortable without depending on a future refinance?
- Can the buyer negotiate a better price or seller credit?
- How much competition exists for the property?
- Does the home support the buyer’s long-term plans?
- What would waiting improve, and what could it cost?
A Lower Purchase Price Can Matter as Much as a Lower Rate
Buyers naturally focus on mortgage rates because the rate affects their monthly payment. The purchase price, however, affects the amount borrowed, required down payment, property taxes, and long-term equity position.
A buyer who secures a favorable purchase price in a less competitive market may have the opportunity to refinance if rates eventually decline. The original purchase price cannot be refinanced later.
That does not mean buyers should purchase a home they cannot comfortably afford while hoping for a future refinance. Any purchase should make financial sense using the terms available at the time.
It does mean the strongest opportunity may not always arrive with the lowest advertised mortgage rate.
Sometimes the better opportunity is a well-located Santa Cruz home with less competition, meaningful negotiating room, and terms that make the purchase work today.
How the Strock Team Is Helping Buyers Win
The role of a buyer’s agent is not simply to open doors or wait for mortgage rates to change.
Ben Strock and the Strock Team help buyers evaluate the full opportunity surrounding a property. That includes the condition of the home, recent neighborhood sales, current competition, potential repairs, seller motivation, financing options, and the terms that could strengthen an offer without creating unnecessary risk.
Depending on the property and transaction, the strategy may include:
- Negotiating the purchase price
- Requesting seller credits toward closing costs
- Exploring a rate buydown with a qualified lender
- Protecting the buyer through appropriate contingencies
- Evaluating properties that have been overlooked
- Identifying opportunities before competition increases
- Structuring terms that matter to the seller without unnecessarily increasing the price
For buyers exploring homes for sale in Santa Cruz or Aptos homes, the objective is not to convince them to purchase regardless of market conditions.
It is to give them the information and representation needed to recognize when a genuine opportunity aligns with their finances, lifestyle, and long-term goals.
Should Sellers Wait Until Mortgage Rates Fall?
Not necessarily.
A homeowner may assume that lower mortgage rates will automatically bring more buyers and a higher sale price. Lower rates could increase demand, but they may also encourage more homeowners to list, creating additional competition among sellers.
The right time to sell depends on the homeowner’s goals, the property, and the conditions within its specific micro-market.
A seller in the Aptos real estate market may face different inventory and buyer behavior than someone selling in Santa Cruz, Capitola, Soquel, or Scotts Valley.
The local cash-buyer data is also important for sellers. With 31% of countywide residential purchases completed in cash, a meaningful portion of the buyer pool is not directly dependent on mortgage-rate movements.
That share increases substantially at higher price points. Sellers above $2 million or $3 million may be marketing to a buyer pool in which cash purchases represent the majority of completed transactions.
This does not eliminate the need for strategy. Serious buyers, whether financed or paying cash, remain selective and attentive to value.
Preparation, pricing, presentation, and marketing still determine how effectively a property competes.
How the Strock Team Is Helping Sellers Win
In an elevated-rate environment, buyers have less patience for homes that appear overpriced or poorly presented.
Ben Strock and the Strock Team begin by evaluating how the property will compete within the current Santa Cruz real estate market. That includes its condition, location, price range, recent comparable sales, active competition, and likely buyer profile.
The strategy may include targeted improvements, staging, professional photography, videography, launch timing, digital exposure, buyer outreach, and pricing designed to generate a strong initial response.
For some sellers, it may make sense to complete updates before listing. For others, selling as-is or entering the market sooner may create a better result.
There is no universal strategy for every Santa Cruz home.
The objective is to position the property so the right buyers understand its value, whether those buyers are financing the purchase or paying cash.
Will Mortgage Rates Go Down in 2027?
They may, but the amount and timing remain uncertain.
Zillow currently expects gradual relief, with mortgage rates potentially reaching approximately 6.5% by the end of 2027. The Mortgage Bankers Association expects rates to remain above 7% throughout 2027. Realtor.com economists continue to emphasize that inflation, employment, Treasury yields, and Federal Reserve policy will shape what happens next.
These are informed forecasts, not guarantees.
Buyers and sellers should avoid building an entire real estate decision around one predicted mortgage rate. A better approach is to evaluate the opportunity available today and compare it with the realistic costs and uncertainties of waiting.
For someone searching for homes for sale in Santa Cruz, the right purchase may involve a negotiated price, favorable terms, or less competition.
For a homeowner considering selling, the right opportunity may come from entering the market with a carefully prepared and strategically positioned property while serious financed and cash buyers remain active.
The Best Decision Begins With Your Numbers
The national mortgage-rate forecast provides useful context, but it cannot determine whether buying or selling is right for you.
Santa Cruz County is made up of individual communities, price ranges, and micro-markets. Santa Cruz real estate, Aptos real estate, and the surrounding areas do not always move in exactly the same way as the national housing market.
A conversation with an experienced Aptos Realtor or Santa Cruz Realtor can help you understand:
- What you can comfortably afford
- Which opportunities exist within your price range
- What your current property may be worth
- How local cash-buyer activity could influence your sale
- How increased or decreased competition could affect you
- Whether moving now supports your larger plans
- What a successful strategy would look like in today’s market
Ben Strock and the Strock Team combine local market knowledge, thoughtful preparation, strategic negotiation, and clear guidance to help buyers and sellers move forward with confidence rather than speculation.
Curious what today’s rates and local market conditions could mean for you?
Let’s start the conversation.
Strock Team | eXp Luxury
Where Remarkable Real Estate Lives in California
Santa Cruz County · Monterey Bay · Silicon Valley
831-688-9800
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