Mortgage rates play a large role in the real estate market; more than 60% of home purchases nationwide use some type of financing. The remaining percentage represents cash purchases, however, mortgage rates still influence cash buyers’ decisions because they impact inventory levels and overall market behavior. During the last week of February 2026, it made headlines when the 30-year federal mortgage rate dipped below 6%, reaching 5.98%.
30 Year Federal Mortgage Rate
After three and a half years of rates over 6%, this is the lowest rate we have seen since before September 2022. Rates peaked at nearly 8% in October 2023, which had a notable impact on the real estate market. This followed record lows in 2020 - 2021, when rates hovered around 3% and reached as low as 2.65%.
Just as broader factors such as national economic conditions, inflation, and the bond market influence mortgage rates, those rates directly affect buyers’ purchasing power. Even a 1% change can shift a buyer’s budget by roughly 10%. One of our predictions for 2026 is that we may continue to see interest rates trend close to the mid-to-upper 5% range, which would allow for increased movement in the real estate market.
Loan Options
Although fluctuating mortgage rates can influence home sales activity, the market typically continues to move even when rates are above 6% because of creative financing options. In addition to conventional loans, government-backed VA or FHA loans, rate buydowns, owner carry, and other financing strategies can allow buyers to enter the market. For existing homeowners, refinancing may be a good option as rates decrease, potentially reducing monthly payments.
Cash Purchases
When interest rates increase, the number of all-cash purchases often rises, since these buyers are not dependent on borrowing costs. However, when rates decrease significantly, some cash buyers choose to obtain a loan due to the low borrowing rate. Cash purchases can be more attractive to sellers because they remove the financing contingencies from the contract.
As we move further into 2026, this is a positive trend to see early in the year, especially leading into the busy spring and summer seasons. Whether you’re buying or selling, Max Hutcheson and Deven Meininger, Durango RealtorsⓇ, would love to put their knowledge and experience to work for you. Please don’t hesitate to reach out to The Durango Team at The Wells Group for any of your real estate needs.
