Will Mortgage Rates
Really Drop to 5%?

Orange County homebuyers and sellers are watching mortgage rates closely — and there’s a real possibility they could fall into the low to mid-5% range by summer 2026.
This week’s Beach Cities Market Update reveals how these trends are shaping Dana Point, San Clemente, Laguna Niguel, and San Juan Capistrano real estate.

Highlights in This Week’s Update

• Record Sale in San Clemente:
  A breathtaking $10.1M oceanfront property in Cypress Cove just set a new benchmark for luxury real estate.

• Dana Point Luxury Listing:
  A $18.99M listing in The Strand hits the market, offering unmatched oceanfront views and prestige.

• Mortgage Rates on the Move:
  Rates are showing a clear downward trend, with the potential to reach the high 5s by late 2025 or early 2026.

• Federal Reserve’s Role:
  Recent rate cuts by the Fed, combined with a tightening Treasury vs. mortgage spread, could ignite stronger housing demand in 2025 and 2026.

Quick FAQ: What Buyers and Sellers Are Asking

Q: How low could mortgage rates go in 2026?
If trends continue, rates may drop into the 5.2% – 5.6% range by mid-2026, increasing affordability for buyers and boosting housing market activity.

Q: Why are closings surging right now?
When mortgage rates briefly dipped to 6.1%, buyers rushed to secure homes — causing a sudden spike in pending sales and closed transactions.

Q: Why does the Treasury spread matter for real estate?
The Treasury vs. mortgage rate spread acts as a predictor of future mortgage rates.
A narrowing spread signals falling rates ahead, which can:

• Increase buyer confidence

• Boost demand for entry-level and luxury homes

• Create competitive bidding scenarios

Why This Matters for Orange County Buyers & Sellers

For Buyers:

• Lower rates could dramatically increase your buying power, allowing you to consider homes with bigger square footage or better locations.

• Ideal for those searching for:

  • First-time homes or move-in ready condos

  • Luxury oceanfront estates in Dana Point or San Clemente

  • Homes with large backyards or pools

For Sellers:

• Falling rates bring more buyers back into the market, which can drive multiple-offer situations.

• Now is the time to:

  • Stage your home for maximum appeal

  • Price strategically to attract serious buyers

  • Prepare for an active spring 2025 market

If mortgage rates continue trending downward and the Fed maintains its easing stance,
2025 and 2026 could see the strongest housing market growth since 2021.

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Whether you’re exploring luxury real estate in Dana Point, searching for horse properties in San Juan Capistrano, or comparing Laguna Niguel neighborhoods with top schools, staying informed is key to navigating today’s fast-moving market.

If you’re thinking about making a move in today’s market, you have to know how to use the current conditions to your advantage. Buyer behavior, market timing, and interest rates are all shifting, and staying informed can make a big difference. Don’t hesitate to give me a call at (949) 835-4713 or send an email to simon@sellwiththerightguy.com if you have any questions.
Let’s talk strategy and figure out how you can win in real estate this year.