The average 30-year fixed mortgage rate climbed to 7.03% in the week ended Sept. 24, 2026, according to Freddie Mac's Primary Mortgage Market Survey. That's up from 6.95% the prior week and 6.30% a year earlier, and marks the first time the rate has exceeded 7% since January 2025. The move coincided with a sharp selloff in Treasuries: the 30-year yield touched roughly 5.5%, a level unseen since June 2004, while the 10-year note reached about 5.2%, its highest since 2007. The Federal Reserve's quarter-point rate hike a week earlier helped fuel the jump.
For financial advisors, the higher rate environment is reshaping how they treat the family home—often the largest asset on a client's balance sheet. With borrowing costs up, the pool of potential buyers shrinks, and homeowners who locked in low rates are reluctant to sell, a phenomenon known as the rate lock-in effect. The result is that home equity can look substantial on paper but is harder to convert into cash on a client's timetable.
Home equity as a less liquid asset
Ryan Botzong, vice president and financial advisor at Austin, Texas-based 49 Financial, now assumes that for clients whose residence represents 60% to 70% of net worth, that equity is considerably less liquid than historically. He recommends building a short-term reserve in cash or bonds to give clients flexibility if they need to sell into a slower market. "With Treasury yields where they are, we're seeing the value of a home as being a lot more about utility—peace of mind and emotional stability—than about investment growth," Botzong said. He added that a home can still serve as an inflation hedge, but buyers should plan to stay long-term rather than move frequently.
Should the home count as an investable asset?
Jim Worden, chief investment officer at The Wealth Consulting Group in Las Vegas, draws a firmer line. He argues that clients generally should not treat their home as an investable asset in a portfolio or financial plan unless they have borrowed against it and invested the proceeds. Advisors should explain the risks of borrowing against any illiquid asset and build plans that accommodate the reality that homes often take longer to sell and fetch less than expected. "Investing in a home can still make a lot of sense, based on how much money is put down, the location, and the growth of the local market," Worden said, but he cautioned against interest-only or negative amortizing loans for those without sufficient income.
How mortgage rates and Treasury yields reshape allocation
Vance Litchfield, director of wealth management and financial planning at Sagient in El Segundo, California, treats the home as a core part of a client's balance sheet but not as a liquid investment. Because higher rates can limit mobility, he integrates the property into the full plan—retirement income, cash flow, debt management, and estate planning—rather than evaluating the investment portfolio in isolation. He also sees the bond market offering a credible alternative to real estate for growth. "Higher Treasury yields make fixed income more attractive from both an income and risk-management perspective," Litchfield said, reinforcing the importance of diversification rather than assuming real estate should dominate simply because it has historically appreciated.
Retirement planning for house-rich, cash-poor clients
The pressure is most acute for clients nearing retirement whose wealth is concentrated in a single property. Botzong said downsizing can make sense for some, particularly one- or two-person households that no longer need the space. "Ultimately, retirement is about having optionality. You may have a high net worth on paper because your house elevates it, but if you don't have liquidity, you don't have optionality," he said. Worden suggested that house-rich, cash-poor clients might explore borrowing against the property to meet cash flow needs, provided they do so prudently. Litchfield frames the goal as converting balance-sheet wealth into lasting flexibility—whether through downsizing, a home equity strategy, refinancing when conditions allow, or building liquid investments outside the house.
Advisors are also watching broader market trends. The rise in Treasury yields has made barbell allocations more attractive, and the ongoing shift toward active ETFs reflects a search for liquidity and structure. For clients with concentrated real estate, the message is clear: don't count on the house to fund retirement without a plan for liquidity.
