In the past, mortgage rates in the 3% range were common, but things have changed significantly now. From my perspective as someone who has observed the market in San Jose for a long time, there are still many buyers who find the current rate levels unfamiliar.

Let's first look at how rates are determined. The 10-year Treasury yield, the Federal Reserve's interest rate policy, inflation indicators, and the demand in the MBS market all intertwine to create actual mortgage rates. In particular, the 10-year Treasury yield tends to move in tandem with the 30-year fixed mortgage due to their similar maturities.

As of 2026, the average rate for a 30-year fixed mortgage is reported to be in the mid to high 6% range according to Freddie Mac PMMS. The 15-year fixed mortgage often moves about 0.5 percentage points lower than this. It is important not to judge based on the low-rate era too hastily.

Another common question is whether to choose an ARM or a fixed-rate mortgage. An ARM starts with a lower rate for the first 5 to 7 years but adjusts based on market rates afterward. For those in the tech industry in San Jose, where job changes or relocations are frequent, the initial low-rate period of an ARM can be attractive, while a 30-year fixed mortgage is more stable for those planning to settle down long-term.

We should also consider the differences based on credit score ranges. It is common to see a rate difference of around 1 percentage point between scores above 740 and those in the 620 range, which can lead to tens of thousands of dollars in interest differences over 30 years.

Here are some items to check before looking for a home:

• Have you checked for errors on your credit report?
• Have you lowered your credit utilization to below 30%?
• Have you received and compared quotes from at least three lenders?
• How much down payment can you secure?

San Jose is a region with income volatility in the tech industry, so lenders tend to scrutinize income documentation closely. If stock options or bonuses make up a significant part of your income, preparing related documents in advance can help with the approval process.

While interest rates may move gradually based on inflation and the Fed's decisions, it is unlikely that they will return to previous levels quickly. Preparing a loan structure that suits you under the current conditions is a realistic way to plan for homeownership in San Jose.