Mortgage rates top 7% as Sacramento homebuyers face renewed affordability crunch
Mortgage rates have climbed above 7% for the first time in nearly two years, adding another hurdle for California homebuyers already facing high housing costs.
Freddie Mac reported Thursday that the average rate on a 30-year fixed mortgage reached 7.03%, the highest level since January 2025. Rates have risen more than a full percentage point since briefly falling below 6% in February.
In Sacramento, local mortgage brokers say borrowers are already seeing rates closer to 7.5%.
For Raj Kumar and his family, the timing of their home purchase meant getting into their new house before borrowing costs potentially climbed even higher.
As the family unpacked boxes, Kumar said the experience of buying a home has "been insane."
Cam Villa, a Natomas-based mortgage broker, has been watching the recent jump in rates.
"It's been a really big rise over the last five weeks," Villa said. "So, first and foremost, we just eclipsed the 7%. Like, mentally, psychologically, that changes a whole part of the ballgame."
What 7% means for Sacramento buyers
The median home price in Sacramento is about $533,000.
For a buyer putting 20% down, a 7% mortgage rate would mean a principal-and-interest payment of roughly $2,800 a month on the remaining loan balance, before property taxes, insurance and other costs.
That is substantially more than buyers would have paid when mortgage rates hit historic lows.
Four years ago, mortgage rates briefly fell as low as 2.65%, and that same mortgage payment would be $1,100 a month. That difference is $1700 a month.
Nationally, the recent increase has also added hundreds of dollars to monthly payments. Freddie Mac's data shows that a roughly 1 percentage-point increase in mortgage rates since February translates to about $276 more per month for someone financing a $400,000 home loan.
Buyers weigh whether to wait
Homes in the Sacramento area are spending an average of about 42 days on the market, according to the data cited by local real estate experts. About 60% of homes are selling for less than their asking price.
But lower prices or seller concessions don't necessarily offset the cost of a higher mortgage rate.
"So right now you're telling people, hey, maybe homeownership is not for you right now," I asked Villa.
"I think that's an actual conversation," Villa said. "Absolutely. It might not be the time and the place. But there is also the cost of waiting."
The Mortgage Bankers Association reported an even higher average rate this week, at 7.12%.
For buyers who can qualify for a mortgage, Villa said there is still plenty of housing inventory to choose from. But the higher cost of borrowing is forcing more buyers to take a harder look at what they can afford.
"The interest rates banks are giving is really, really high," Kumar said.
