Borrowing to buy a home just got more expensive again. The average rate on a 30-year fixed mortgage rose to 7.40% this week, Freddie Mac said Thursday, Oct. 8, up from 7.28% a week earlier and 6.30% a year ago.
It was the seventh weekly increase in a row and the highest level since Nov. 16, 2023, when the rate was 7.44%, according to the Associated Press.
The Numbers
- 30-year fixed: 7.40% (last week 7.28%, a year ago 6.30%)
- 15-year fixed: 6.73% (last week 6.60%, a year ago 5.53%)
- Low point this year: 5.98% in late February, the lowest since late 2022
Freddie Mac’s survey covers conventional home purchase loans for borrowers who put 20% down and have excellent credit, so many buyers will be quoted higher rates.
What It Costs You
The jump since February adds up fast. The 1.42-percentage-point rise adds roughly $376 a month to the payment on a $400,000 loan, the AP calculated. Over a year, that is about $4,500 more for the same house.
Why Rates Keep Climbing
Mortgage rates tend to follow the 10-year Treasury yield, which lenders use as a guide. That yield was 5.29% at midday Thursday, its highest since 2002, the AP reported. Before the U.S. war with Iran began in late February, it was 3.97%. Since then, surging oil prices have fueled worries about inflation and made bond markets more volatile.
The Federal Reserve has also turned up the heat. It raised its benchmark rate by a quarter point last month, to a range of 3.75% to 4.00%, its first increase in three years, Reuters noted. Economists expect another hike in December.
The Housing Market Feels It
- Existing home sales fell 2% from July to August, to an annual pace of 3.98 million, the slowest in more than a year, according to the National Association of Realtors.
- Mortgage applications have fallen for five straight weeks, the Mortgage Bankers Association says.
- Refinance applications dropped to their lowest level since January 2025, less than half of last year’s pace.
A Job Market That Isn’t Helping
Higher borrowing costs are arriving while hiring is weak. Employers added only 29,000 jobs in September, and the typical unemployed worker had been out of work for 11.5 weeks, near a four-and-a-half-year high, Reuters reported. Layoffs remain low, though: first-time jobless claims fell to 197,000 last week, near 57-year lows. Economists call it a “low-hire, low-fire” job market, which is good news for people who already have jobs and harder for those looking.
Should You Wait for Rates to Fall?
Nobody knows where rates go next, and this year shows how fast they can move: they were under 6% in February. But with the 10-year Treasury yield at a two-decade high and economists expecting another Fed hike in December, there is no sign of quick relief. If you find the right home at a payment you can afford today, waiting for a lower rate is a bet. If rates do fall later, refinancing is an option, though it comes with closing costs.
What Buyers Can Do
Freddie Mac chief economist Sam Khater’s advice this week was simple: shop around. Rates can vary widely between lenders for the same borrower. A few practical steps:
- Get Loan Estimates from at least three lenders on the same day and compare the rate, points and fees, not just the monthly payment.
- Check your credit reports before you apply; fixing an error can help you qualify for a better rate.
- Ask lenders how a rate lock works and how long it lasts, since rates have been rising week after week.
- Run the numbers at today’s rate. If the payment only works if rates fall, that is a gamble, not a plan.
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