On October 1, Freddie Mac reported that the average 30-year mortgage rate had risen to 7.28%, the highest since November 2023. Once more, claims surfaced asserting that elevated interest rates have excluded an entire generation from homeownership. While I appreciate the sentiment behind those concerns, my nearly thirty-year tenure in mortgage servicing at Ocwen taught me that taking a step back and looking at the data can often tell a different story. 

If we consider the baseline, the 30-year rate has averaged around 7.7% ever since Freddie Mac initiated tracking in 1971. Current rates are actually slightly lower than that benchmark. They only appear high if we compare them to the pandemic era, a time when borrowing costs dropped to an all-time low of 2.65% and led many buyers to treat historically cheap financing as standard. How did terms that previous generations would view as routine turn into a crisis?

And yet young people really are being shut out. According to the Census Bureau, the homeownership rate for households headed by someone under 35 fell to 35.2% this spring, down from 36.4% last year. Clearly, something isn’t working. I’m just not convinced the mortgage rate is to blame. 

There are at least two other factors at play here. First, homes are being taken off the long-term market and turned into short-term rentals, and second, the cost of keeping a home once you own it is rising. Underneath both we also have income inequality, which makes it extremely difficult for households to save enough for a down payment, no matter what the rate is.

Let’s consider supply first. Short-term rentals now account for roughly 1.6% of the nation’s housing stock. That may sound modest, but it is about twice the share of homes that were sitting empty and for sale in the second quarter of this year. Because housing markets function on slim margins, pulling even a minor fraction of properties from the market can significantly restrict overall housing supply.

Manhattan paints a stark picture of what a shortage looks like. In August, the median rent reached $5,285, up 7% from a year earlier. Builders, meanwhile, cannot close the gap quickly. Progress in construction remains hindered by restrictive zoning laws, obsolete building codes, and a lack of skilled workers, coupled with the industry’s hesitation to embrace modern techniques.

Owners of second homes and investment properties have good reason to favor short-term rentals, which often earn more than a long-term lease just as the cost of owning property keeps rising. According to ATTOM, total property taxes on single-family homes rose 3.7% in 2025, well ahead of 2.7% inflation, even as average home values slipped.While fixed-rate mortgages secure principal and interest payments, they fail to buffer against escalating ownership expenses. When these ongoing obligations outpace household budgets, short-term leasing becomes an attractive mechanism to offset financial pressures, progressively depleting inventory from the long-term housing pool.

Beneath both pressures lies income. A lower rate helps those who already qualify for a mortgage, but it does little for households that cannot save up enough for a down payment. The way lenders evaluate renters makes matters worse. Fannie Mae began considering on-time rent payments in 2021, and its own research found that 17% of recently rejected applicants would have qualified had their rental history counted. Even so, rent history is typically treated as a secondary consideration instead of primary proof of creditworthiness. When an individual maintains a ten-year record of punctual rent payments, what additional evidence should lenders reasonably require to confirm their financial stability?

While the mortgage rate gets the most attention, it is far from the main driver of today’s housing challenges. Broadening access to homeownership demands a multi-pronged approach: redirecting homes back into the long-term housing supply, addressing the ongoing expenses that accumulate post-purchase, and fully factoring in renters’ proven payment records.