Mortgage Rates Hold at 7.40%, Matching Highest Level Since 2023

The average rate on a 30-year fixed-rate mortgage held at 7.40% this week, Freddie Mac reported Thursday, marking the first time in more than a year that the benchmark rate has stayed at its highest level since November 2023 for two consecutive weeks. The 15-year fixed rate, popular with refinancers, slipped slightly to 6.71% from 6.73%.

The plateau offers no relief to buyers already squeezed by a year of climbing borrowing costs. A year ago, the 30-year rate stood at 6.27%, according to Freddie Mac's Primary Mortgage Market Survey, meaning the typical homebuyer is now paying more than a full percentage point more to finance a house than in October 2025.

The numbers behind the stall

Freddie Mac's weekly survey, which draws on loan applications submitted through its Loan Product Advisor system, is the most widely cited gauge of mortgage costs and is published every Thursday at noon Eastern. Historical data maintained by the Federal Reserve Bank of St. Louis confirm the reading: the St. Louis Fed's own weekly series shows the 30-year average rising from 6.95% on September 17 to 7.03%, then 7.28%, then 7.40% for the past two weeks running.

A separate weekly survey from the Mortgage Bankers Association, which uses a different methodology, put the 30-year rate even higher, at 7.49% for the week ended October 2. That survey also found total mortgage application volume at its lowest level since February 2025 and down nearly half since January, with refinancing applications falling sharply. "Very few homeowners have an incentive to refinance at these rates," MBA deputy chief economist Joel Kan said, adding that the jump in borrowing costs has pushed many prospective buyers to the sidelines, according to reporting in the Honolulu Star-Advertiser.

A war overseas, an inflation problem at home

Mortgage rates move with the 10-year Treasury yield, and that yield has been climbing for months. It touched 5.34% on October 7 — its highest level since 2002 — as the continuing U.S.-Israeli military campaign against Iran, which began in late February, has pushed up global energy prices. Higher oil prices have fed directly into inflation readings, and the 30-year mortgage rate has risen roughly 142 basis points since the conflict started, according to a Reuters dispatch carried by Kitco.

The Federal Reserve has been unable to offset that pressure. Policymakers raised the benchmark federal funds rate by a quarter point in September — the first increase in three years — lifting it to a range of 3.75% to 4.00% under new Chair Kevin Warsh, and signaled further increases are possible before year's end. Inflation measured 3.4% in August, well above the Fed's 2% target. Markets currently expect the Fed to hold rates steady at its late-October meeting, but traders are no longer pricing in the cuts that many homebuyers had been counting on earlier this year.

Who gets squeezed — and a law meant to help

The combination of high rates and still-elevated home prices has created what many economists now call an affordability crisis, one that has become a central theme heading into the November 3 midterm elections; a Reuters/Ipsos poll found the cost of living to be voters' top concern. Higher rates cut two ways in the housing market. They discourage would-be buyers from taking on new debt, but they also discourage existing homeowners — the large majority of whom are locked into mortgages below 5% — from selling and giving up those lower rates, which keeps inventory tight even as demand cools.

That dynamic was part of the motivation behind the 21st Century ROAD to Housing Act, a sprawling bipartisan housing package that became law on July 10 after President Trump declined to sign it, allowing it to take effect automatically once the 10-day constitutional window lapsed. The measure, now codified as Public Law 119-101, bundles more than 40 provisions aimed at increasing housing supply, including faster environmental reviews for new construction and a cap barring large corporate landlords that already own at least 350 houses from buying more. Analysts have cautioned that the investor provision alone is unlikely to move the market much, since institutional investors own only about 3% of the single-family rental stock nationally, though their presence is far larger in some individual metro areas, according to NPR's coverage of the bill's enactment.

Economists see a stall, not a collapse

Despite the sharp rise in borrowing costs, most housing economists are not forecasting a price crash, largely because the same high rates that are deterring buyers are also keeping sellers off the market.

"Higher rates are holding back both demand and supply this fall," said Lisa Sturtevant, chief economist at Bright MLS, who added that the market is more likely to see a "stall" than a "crash" through the rest of the year.

That stalemate is visible in the broader data: purchase mortgage applications have fallen for several consecutive weeks even as home prices, propped up by scarce listings, have mostly held their ground. First-time buyers and move-up buyers who need financing are the most exposed to the rate increase, since a one-percentage-point rise in rates adds roughly $150 to $200 a month to payments on a typical $400,000 loan, depending on the down payment. Buyers using adjustable-rate mortgages or cash purchases are comparatively insulated.

What happens next

Freddie Mac will publish its next PMMS reading on October 22, and economists will be watching whether the 30-year rate breaks above 7.40% or finally eases, particularly if the conflict in the Middle East shows signs of de-escalating or if the Fed signals less urgency about further hikes at its late-October meeting. Housing-market data due later this month — existing home sales, new construction starts and pending sales — will show more clearly how much of the demand pullback described by MBA and Freddie Mac has translated into an actual slowdown in closed transactions.

For now, both Freddie Mac's and the Fed's own data agree on one point: the cost of a mortgage in the United States is higher than at any point since late 2023, and the political pressure building around housing costs is unlikely to ease before voters go to the polls on November 3.