Mortgage rates moved higher again this week, and California buyers are feeling it.
When rates rise, the headline gets attention. The real issue? What it does to your monthly payment on a California-sized loan.
What's happening
Rates climbed to highest levels in 2026:
- 30-year fixed: 6.75-7.125%
- 15-year fixed: 6.0-6.375%
- FHA: 6.375-6.75%
- Jumbo: 7.0-7.5%
Even small increases matter on large loans.
Payment impact in California
$700K loan:
- At 6.5%: $4,427/month
- At 7.0%: $4,656/month
- Difference: $229/month ($2,748/year)
$1M loan:
- At 6.5%: $6,324/month
- At 7.0%: $6,651/month
- Difference: $327/month ($3,924/year)
On California loan amounts, 0.5% rate increase = $200-400/month more.
What buyers should do now
1. Lock your rate immediately
If you're under contract, lock NOW. Don't float hoping for a drop.
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Rates may go higher before they go lower. Lock and move on.
2. Consider rate buydown
Pay 1-2 points to lower your rate. On large loans, break-even can be 2-3 years.
Example: $800K loan
- Pay $16K in points
- Drop rate from 7.0% to 6.5%
- Save $260/month
- Break-even: 62 months
If staying 5+ years, consider it.
3. Adjust your budget
You may qualify for less now than you did 3 months ago.
$150K income buyer:
- At 6.0%: qualifies for $700K
- At 7.0%: qualifies for $625K
Be ready to adjust target price.
4. Explore different loan types
FHA: May allow higher DTI than conventional
ARM: 5/1 or 7/1 ARM rates are 0.5-0.75% lower than 30-year fixed
Conventional with points: Buy rate down for long-term savings
5. Increase down payment
More down = lower loan = lower payment = qualify for more.
$650K home:
- 10% down: $3,726/month at 7.0%
- 20% down: $3,454/month at 7.0%
Extra $65K down saves $272/month.
6. Shop multiple lenders
Rates vary 0.25-0.5% between lenders. On $700K, that's $100-200/month.
Get 3 quotes same day, compare, choose best.
7. Don't wait for perfect rate
Trying to time the market costs money. If you need a home, buy now and refinance later if rates drop.
"Marry the house, date the rate."
Will rates go back down?
Maybe. Maybe not. Nobody knows.
What we know:
- Fed hasn't signaled imminent cuts
- Economic data remains mixed
- California housing demand is still strong
What you control:
- Locking vs. floating
- Points paid
- Down payment amount
- Lender selection
- Loan type
Focus on what you control.
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Should you wait?
Wait if:
- You're not in a rush
- You can find deals in slower months
- Your lease is flexible
Don't wait if:
- You need housing now
- Market inventory is limited
- Waiting costs you more in rent
- Rates keep climbing (opportunity cost)
Refin strategy
If you buy at 7.0% today and rates drop to 6.0% next year, you can refinance.
Break-even analysis:
- Refi costs: ~$5K
- Save $350/month
- Break-even: 14 months
Buy now if you need the home. Refinance later if rates improve.
Bottom line
Yes, rates are higher. But:
- California housing demand is strong
- Inventory is still limited
- Waiting may cost more if rates keep rising
- You can always refinance later
Focus on finding the right home, locking a competitive rate, and structuring the best deal you can today.
Ready to lock a rate? Get A Quote.
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Bill McCoy | 888-421-1117 | info@loanall.com