# Cotality's chief economist puts a 9% mortgage rate in a severe scenario and about 7% in the base case > TC Bulletin found no published forecast of a 10% mortgage rate. At the spread rates now carry over Treasuries, 10% would need a 10-year yield near 8%, against 5.22% on 8 October. The payment arithmetic shows how far prices would have to fall to hold volume at those rates. **Section:** The Desk **Published:** October 11, 2026 **Byline:** TC Bulletin Staff **Canonical URL:** https://tcbulletin.com/desk/cotality-economist-puts-9-percent-mortgage-rate-in-severe-scenario **Publisher:** TC Bulletin (tcbulletin.com) ## Key points - Cotality chief economist Selma Hepp said on CNBC, as Yahoo Finance reported on 2 October 2026, that a 9% mortgage rate is possible only in a severe scenario. The base case is rates near 7% for a little while. - The severe scenario combines Treasury yields rising toward 6% to 7% with a mortgage spread near 2 points, driven by a debt-limit standoff, a shock to confidence in the Treasury market and a weaker dollar as a safe haven. - TC Bulletin searched for a published forecast of 10% and found none. Other forecasts it found run from Zillow's 6.7% by the end of 2026 to Realtor.com's Jake Krimmel saying rates are 'far more likely to go up than down' by the end of the year. - On a $343,280 loan, principal and interest is $2,377 a month at 7.40%, $2,762 at 9% and $3,013 at 10%. To hold the 7.40% payment, the price would have to be $369,242 at 9% (13.9% lower) or $338,548 at 10% (21.1% lower). - Prices have not fallen so far. NAR's median rose 1.6% in August, its 38th straight annual gain, while sales fell 1.2% from a year earlier. Krimmel said more than one in five listings carried a price cut in August. --- Cotality's chief economist Selma Hepp told CNBC's Squawk on the Street that a 9% mortgage rate would require a severe combination of events, and that it is not the base case. Yahoo Finance reported the interview on 2 October 2026, when Mortgage News Daily had the 30-year rate at 7.5% as of the prior Tuesday. ## What the forecasts say Hepp's base case is that rates stay near 7% for a little while. Hepp's 9% figure depends on Treasury yields rising toward 6% to 7% for a temporary spike while the mortgage spread stays near 200 basis points, which is 2 points. The disruptions she named are a debt-limit standoff, a more serious shock to confidence in the Treasury market, and further weakening of the dollar's safe-haven status. ### Published rate outlooks, September and October 2026 | Measure | Value | Note | | --- | --- | --- | | Cotality, Selma Hepp | About 7% base, 9% severe | CNBC interview reported by Yahoo Finance, 2 October | | Zillow | 6.7% end-2026, 6.3% end-2027 | As reported by CBS News, 24 September | | Realtor.com, Jake Krimmel | Up more likely than down | 'far more likely to go up than down by the end of the year or in the next month or two.' CBS News, 24 September | | NAR, Lawrence Yun | Direction tied to the Iran war | Said deficits and AI-driven growth will prevent rates from falling meaningfully. CBS News, 24 September | | Forecast of 10% | None found | TC Bulletin searched on 11 October 2026 | > **Unverified.** A prediction of 10% has been put to the desk. TC Bulletin could not find one with a named author, a date and stated assumptions, so this story treats 9% as the highest published figure. A reader who has a source for a 10% forecast can send it to the desk, and it will be added with its date and assumptions. ## What 9% and 10% would require A mortgage rate is the 10-year yield plus a spread, and TC Bulletin's explainer on that relationship sets the current spread at about 2 points. On that spread, 9% needs a 10-year yield near 7%, which matches the range Hepp gave. A 10% rate needs a yield near 8%. The yield was 5.22% on 8 October, according to the Federal Reserve's H.15 release. A wider spread would lower the yield needed, and the spread was above 3 points in 2022 and 2023, per Wolf Street's analysis. This is TC Bulletin's arithmetic and not anyone's forecast. ## What the payment arithmetic says about volume The table holds NAR's August median price of $429,100, a 20% down payment and a 30-year fixed loan constant, and counts principal and interest only. The second column asks the reverse question: at each rate, what price gives the same monthly payment a buyer would have faced at 7.40%. ### Payment at each rate, and the price that holds the 7.40% payment | Measure | Value | Note | | --- | --- | --- | | 7.40% | $2,377 a month | Freddie Mac, week ending 8 October 2026. Price $429,100 | | 9% | $2,762 a month | 16.2% above the 7.40% payment. Price needed to hold it: $369,242, 13.9% lower | | 10% | $3,013 a month | 26.7% above the 7.40% payment. Price needed to hold it: $338,548, 21.1% lower | | 10% against 6.30% | 29.5% lower | Price that would match the $2,125 payment at last year's 6.30%: $302,655 | A buyer working to a fixed monthly payment has three ways to absorb a higher rate: pay less for the house, earn more, or not buy. Wages grew 3.1% in August, per Yun, which is a small fraction of a 16% or 27% payment increase. If sellers do not cut prices, the arithmetic leaves the third option, and the volume that goes missing is contracts. The current data show that pattern at today's rates. NAR's August median price was up 1.6% on a year earlier while sales were down 1.2%. Realtor.com's Krimmel said more than one in five listings had a price cut in August, so some sellers are adjusting, and Yun said the larger inventory gives buyers better opportunities to negotiate. Hepp said many existing owners are reluctant to move because their current loans are valuable to keep, and that builders are using rate buy-downs and seller concessions. Owners who will not list and sellers who will not cut are why prices can hold while volume falls. > **What this does and does not show.** The arithmetic shows how much a price or an income would have to move to offset a rate. It does not show that sellers will refuse to cut, or that volume at 9% or 10% would be a given figure. No source reviewed for this story models sales at those rates, and the observed relationship between 6% and 7.4% rates cannot be assumed to hold at 9%. ## What a coordinator can track - The 10-year yield and the Freddie Mac weekly rate, to see which scenario the market is closer to. Hepp's base case needs yields to stop rising. - NAR's pending index by region. August's 4.7% annual decline was 6.7% in the West and 3.8% in the South. - The share of listings with a price cut, published by Realtor.com, as the sign that sellers are adjusting. - Months of supply and median days on market in NAR's monthly report: 4.9 months and 31 days in August. ### Primary sources for this story - [Yahoo Finance, Cotality's Selma Hepp on CNBC](https://finance.yahoo.com/real-estate/articles/mortgage-rates-could-soar-9-133022314.html): Dated 2 October 2026. Base case, scenario conditions, lock-in and builder incentives - [CBS News, mortgage rates back above 7%](https://www.cbsnews.com/news/mortgage-rates-7-percent-rise-forecast/): Dated 24 September 2026. Zillow, Realtor.com, NAR and MBA comments; price cuts in August - [Federal Reserve, H.15 Selected Interest Rates](https://www.federalreserve.gov/releases/h15/): 10-year yield of 5.22% on 8 October 2026 - [NAR, Existing-Home Sales report for August 2026](https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-2-0-decrease-in-august): Prices, sales, supply, days on market - [TC Bulletin on what sets the mortgage rate](https://tcbulletin.com/desk/mortgage-rates-follow-ten-year-treasury-yield-5-22-percent-october-8) --- ## Sources cited - Yahoo Finance, Cotality's Selma Hepp: https://finance.yahoo.com/real-estate/articles/mortgage-rates-could-soar-9-133022314.html - CBS News, mortgage rate outlook: https://www.cbsnews.com/news/mortgage-rates-7-percent-rise-forecast/ - Federal Reserve H.15 Selected Interest Rates: https://www.federalreserve.gov/releases/h15/ Topics: market-volume, mortgage-rates TC Bulletin publishes independent trade coverage of the transaction coordination profession. 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