Mortgage Rates Drop to 5.98% — What This Means for San Diego Buyers and Sellers

Short answer:
As of February 26, 2026, the average 30-year mortgage rate fell to 5.98%, dipping below 6% for the first time since September 2022. For San Diego buyers, this improves affordability. For sellers, it could mean increased spring demand and stronger negotiating power.

For the first time in over three years, mortgage rates have dropped below 6%.

According to Freddie Mac’s Primary Mortgage Market Survey, the average 30-year fixed mortgage rate fell to 5.98%, down from 6.01% the previous week and significantly lower than 6.76% one year ago.

This marks the lowest level since September 8, 2022, when rates averaged 5.89%.

Coverage from PBS NewsHour and NPR confirms the shift, noting that declining Treasury yields and recent Federal Reserve rate cuts are contributing to the downward movement.

So what does this actually mean in San Diego — where home prices are well above the national median?

Let’s break it down.

Why the 5.98% Rate Matters

This isn’t just a psychological milestone.

In higher-priced markets like San Diego County, even a 0.75% rate shift can change monthly payments by hundreds of dollars.

Example:

On a $1,000,000 loan:

• At 6.76% (Feb 2025 average): approx. $6,490/month (principal & interest)

• At 5.98%: approx. $5,990/month

That’s roughly $500 per month difference.

In a market where affordability has been the primary barrier, this is meaningful.

What Caused the Drop?

According to reporting from PBS and NPR, the decline is largely attributed to:

• Lower 10-year Treasury yields

• Federal Reserve benchmark rate cuts

• Cooling inflation data

Mortgage rates peaked near 7.8% in October 2023 before beginning a gradual decline.

While mortgage rates do not move directly in lockstep with the Fed, they are influenced by broader economic trends.

How This Affects San Diego Buyers

1️⃣ Increased Purchasing Power

Buyers who were priced out at 6.75–7% may now re-enter the market.

Even a half-point drop:

• Improves debt-to-income ratios

• Expands loan qualification ranges

• Makes move-up purchases more feasible

In San Diego, where median home prices remain elevated, that shift is amplified.

2️⃣ Renewed Buyer Confidence

Spring is already the strongest buying season nationally. Lower rates heading into March amplify that effect.

Historically, when rates fall meaningfully:

• Showing activity increases

• Offer volume rises

• Competition tightens

San Diego’s limited inventory could magnify that impact.

How This Affects San Diego Sellers

If you’re considering selling, this shift is significant.

1️⃣ Increased Demand Entering Spring

Lower rates typically:

• Increase buyer urgency

• Shorten days on market

• Improve list-to-sale ratios

San Diego remains inventory-constrained compared to historical averages. Stronger buyer demand may further tighten the market.

2️⃣ Move-Up Sellers May Re-Enter

Many homeowners have been “rate locked” in sub-4% mortgages.

While 5.98% is higher than those historic lows, it narrows the psychological gap.

This could:

• Encourage more listings

• Stimulate move-up activity

• Increase transaction volume

3️⃣ Strategic Pricing Still Matters

Lower rates do not justify overpricing.

They do mean:

• Buyers qualify for slightly more

• Competition may increase

• Well-prepared homes could see stronger activity

Pricing precision remains key.

Will Rates Continue to Fall?

No one can predict mortgage rates with certainty.

Freddie Mac emphasizes that rates are influenced by:

• Treasury yields

• Inflation

• Global economic conditions

• Federal Reserve policy

The key takeaway is not whether rates fall further — it’s that the market has shifted off recent highs.

And that changes buyer psychology.

What This Means Specifically for San Diego

San Diego is not an average-price market.

Because:

• Loan sizes are larger

• Payment sensitivity is amplified

• Affordability thresholds are tighter

When rates fall below 6%, the effect is magnified locally.

Even modest rate changes significantly impact monthly payment in high-cost markets like ours.

If You’re a Buyer in San Diego

This may be a strategic window:

• Improved affordability

• Less competition than peak frenzy years

• Opportunity before more buyers return

Waiting for lower rates could mean competing with more buyers later.

If You’re a Seller in San Diego

Lower rates entering spring could mean:

• More qualified buyers

• Increased showing activity

• Potentially shorter market time

If you’re considering listing in 2026, timing with renewed demand may provide leverage.

Frequently Asked Questions

Is 5.98% historically low?

It is lower than recent years and the lowest since September 2022 — though not as low as pandemic-era rates.

Will San Diego prices rise because of this?

Lower rates can increase demand, but pricing still depends on inventory and local competition.

Should I wait for rates to drop further?

Possibly — but waiting could increase competition if buyer demand accelerates.

The Bottom Line

The drop to 5.98% marks a meaningful shift.

In San Diego:

✔ Buyers gain purchasing power
✔ Sellers may see stronger demand
✔ Spring activity could accelerate

We are not back to ultra-low-rate territory — but we are entering a more opportunity-driven phase of the market.

Want to Understand How This Impacts You Specifically?

Whether you’re buying or selling in San Diego County, we can:

• Run payment comparisons at current rates

• Estimate how renewed demand impacts your home value

• Create a personalized spring strategy

Arianna Schwarz – Schwarz Real Estate Group
San Diego Real Estate Strategy & Market Insight

📩 Reach out for a customized analysis based on today’s mortgage rates and your goals.