The mortgage market is starting to show the cost of higher rates. The 30-year fixed-rate mortgage averaged 7.40 per cent in the week to 8 October, up from 7.28 per cent the week before and 6.30 per cent a year ago, Freddie Mac reported. It is the highest since 16 November 2023, when the average was 7.44 per cent, and the seventh weekly rise in a row, according to Mortgage Professional America. The 15-year rate rose to 6.73 per cent from 6.60 per cent, against 5.53 per cent a year ago.
We reported last week that rates had returned to where they were in 2023 and that the ten-year Treasury was doing most of the work. That is still the cause. The ten-year yield reached 5.29 per cent on Thursday, against 3.97 per cent before the Iran war began in late February, Mortgage Professional America reported. What has changed since is the response from buyers.
What it costs
On a $400,000 30-year loan, the principal-and-interest payment at 7.40 per cent is about $2,770 a month, by our calculation using the standard amortisation formula. At last week's 7.28 per cent it was about $2,737, and at last year's 6.30 per cent about $2,476. That is roughly $294 more a month than a year ago, or about $3,500 a year, before taxes and insurance. ConsumerAffairs published the same figures.
Buyers pulling back
Mortgage applications have fallen for five consecutive weeks, Mortgage Professional America reported. In the latest week, to 2 October, they fell 4.2 per cent on a seasonally adjusted basis, the Mortgage Bankers Association said. "Very few homeowners have an incentive to refinance at these rates, and the jump in borrowing costs has caused many potential borrowers to step back from the purchase market," said Joel Kan, the association's deputy chief economist. Refinance applications were at their lowest level since 2025 and less than half of last year's pace, he said, and FHA purchase applications fell the most, by 6 per cent.
Sellers are adjusting too. Redfin reported that 21.1 per cent of sellers with active listings cut their asking prices in the four weeks to 20 September, up from 19.8 per cent a year earlier and the highest share for that time of year in records back to 2022, ConsumerAffairs said.
Why relief is not close
Mortgage rates follow the ten-year Treasury yield, and the bond market is under pressure from inflation fears, oil prices tied to the Iran war and concern about government debt, ConsumerAffairs reported. The Federal Reserve is not offering a way out. Governor Christopher Waller said on Thursday that more rate rises are needed to bring inflation back to the 2 per cent target, which it has exceeded for more than five years. "The hikes do not need to come at consecutive meetings," he said, "but they should be in place in an acceptable period of time."
CME FedWatch puts the probability of a hold at the Fed's current 3.75 to 4 per cent range at its October meeting at about 78 per cent, with a December rise seen as the more likely next move, Mortgage Professional America said. Stocks have hit records while the bond market flashes warnings.
What a buyer can do
Freddie Mac's rate is an average, and an individual offer can differ. Sam Khater, its chief economist, said borrowers should remember that "shopping around for a mortgage rate and getting multiple quotes can potentially save them thousands over the loan's lifetime." Redfin suggests considering offers below asking on homes listed for more than a month and asking for help with repairs, closing costs or rate buy-downs, ConsumerAffairs said. Those are suggestions from the sources, not guarantees.
The arithmetic leaves little room for hope of a quick change. Jay Lessard of Sonoran Lending told Mortgage Professional America that relief this year would depend on a meaningful slowdown in inflation. With Brent above $100 and the Fed leaning toward more hikes, that is not what this week's data show.
The 7.40 per cent, 7.28 per cent, 6.30 per cent, 6.73 per cent, 6.60 per cent and 5.53 per cent figures and the survey method are from Freddie Mac's Primary Mortgage Market Survey for 8 October 2026. The seventh straight weekly rise, the 16 November 2023 comparison at 7.44 per cent, the ten-year Treasury yield of 5.29 per cent against 3.97 per cent before the war, Christopher Waller's remarks, the CME FedWatch probabilities, and the five consecutive weekly falls in applications are from Mortgage Professional America, 8 October 2026. The 4.2 per cent weekly fall in applications to 2 October, the refinancing low and Joel Kan's comments are from the Mortgage Bankers Association's weekly survey release of 7 October 2026. The Redfin price-cut share is from Redfin's report of 30 September 2026, as also reported by ConsumerAffairs; the Redfin suggestions to buyers and the description of bond-market pressure are from ConsumerAffairs, 9 October 2026. The monthly payment figures are this publication's calculation, using the standard amortisation formula on a $400,000 loan over 30 years, and match ConsumerAffairs' figures. The analysis is our own.
Topics moneymortgageshousingfreddie macinterest ratestreasury yieldsrefinancing
