Mortgage rates hit 7.40%: what a one-point jump costs on a $300,000 loan

The average rate on a 30-year fixed mortgage climbed to 7.40% this week, according to Freddie Mac's weekly survey released Thursday. That is up from 7.28% last week and 6.30% a year ago.

It is the seventh straight weekly increase, according to Fox Business, and puts borrowing costs near their highest level in about three years.

## The numbers

Freddie Mac's Primary Mortgage Market Survey, released every Thursday, showed:

- **30-year fixed:** 7.40% this week, 7.28% last week, 6.30% a year ago
- **15-year fixed:** 6.73% this week, 6.60% last week, 5.53% a year ago

A separate measure from the Mortgage Bankers Association put the average 30-year rate at 7.49% for the week ended Oct. 2, the highest since November 2023, Reuters reported. The two surveys use different methods, so their numbers do not match exactly, but both show rates moving in the same direction.

## What it costs, in dollars

To show what a one-point jump means, NextGen America ran the standard loan math on an example $300,000 mortgage. These figures cover principal and interest only. Taxes, insurance and fees would add more.

- At 6.30% (a year ago): about **$1,857 a month**
- At 7.40% (this week): about **$2,077 a month**

That is roughly **$220 more every month**, or about **$2,640 more a year**. Over the full 30 years, the higher rate adds about **$79,000** in total interest on the same loan.

The $300,000 figure is an illustration, not the typical loan size. The gap grows or shrinks with the amount borrowed.

## Why rates are rising

Mortgage rates closely follow the yield on the 10-year U.S. Treasury note. According to Fox Business, that yield averaged 5.28% this week. Reuters reported it topped 5.3% earlier this week, a 24-year high.

Realtor.com senior economist Joel Berner told Fox Business the pressure comes from "a wicked brew of inflation expectations, a broad bond market selloff, and rising fiscal deficits." Reuters reported that home borrowing rates are up about 1.4 percentage points since U.S.-Israeli strikes on Iran began in late February, and that the Federal Reserve's preferred inflation measure was 3.4% in August, above its 2% target.

The Federal Reserve does not set mortgage rates directly, though its decisions and inflation outlook influence the bond market that does.

## How the market is reacting

Buyers are pulling back. Joel Kan, deputy chief economist at the Mortgage Bankers Association, told Reuters that "very few homeowners have an incentive to refinance at these rates," and that higher borrowing costs have led many potential buyers to step away. MBA data showed mortgage applications fell 4.2% in the week ended Oct. 2.

Wealth advisor Ryan Lynch told Fox Business that pending home sales fell from a year earlier in both August and September, and that sellers have been cutting prices at a rate not seen in four years.

## What it means for you

If you are renting now and hoping to buy in the next few years, the monthly payment, not just the home price, is what decides what you can afford. At today's rates, the same monthly budget buys less house than it did a year ago.

The rates in Freddie Mac's survey are national averages, so the rate any one borrower is offered can be higher or lower. For people who already locked in a lower rate, the MBA's Kan said there is little reason to refinance at current levels.

Freddie Mac releases its next survey next Thursday. Rates will largely track where the 10-year Treasury yield goes from here.