A typical 30-year home loan now costs 7.49% a year in interest, the most expensive it has been since late November 2023, the Mortgage Bankers Association reported Wednesday in its weekly survey covering the week that ended October 2.
That rate climbed from 7.30% just one week earlier. It is the seventh week in a row that mortgage rates have gone up, and the jump this week was nearly two-tenths of a percentage point on its own.
Here is what that means in dollars. On a $400,000 loan, the monthly payment for principal and interest at 7.49% comes to about $2,794. At last week’s rate, the same loan cost about $2,742 a month. One week of rate increases added roughly $52 to every month of a 30-year mortgage for a new borrower.
The bigger picture is sharper still. Mortgage rates have risen by about 1.4 percentage points since late February, when the U.S. and Israel began strikes against Iran. That puts the starting point near 6.09%. On that same $400,000 loan, the monthly payment back then was about $2,421. Today’s buyer pays roughly $373 more each month, or nearly $4,500 more every year, for the same house and the same loan amount.
The reason comes down to what lenders pay to borrow money themselves. Mortgage rates follow the interest rates on long-term U.S. government debt, and those rates have been climbing hard. Both the 10-year and 30-year Treasury rates have reached their highest levels since 2002. Higher energy prices have kept inflation stubborn, and the Federal Reserve raised its key interest rate in September for the first time in three years. Fed Chair Kevin Warsh has signaled more increases could follow, and markets now expect at least one more hike before the end of the year.
Families are pulling back fast. Total mortgage applications fell 4.2% last week, the fifth straight weekly drop, and sank to their lowest level since January 2025. That works out to roughly 1 in 24 fewer applications than the week before.
Homeowners looking to refinance were hit hardest. Refinance applications fell 7.5%, or about 1 in 13 fewer than a week earlier. With rates this high, very few people who already have a mortgage can save money by swapping it for a new one. The week before, refinance requests dropped 9%, and government-backed refinances through the Federal Housing Administration and the Department of Veterans Affairs fell by double digits.
Buyers trying to purchase a home also stepped back, with purchase applications down 2.1%, or about 1 in 50 fewer. Those buyers are being squeezed from two directions at once: the cost of borrowing keeps rising, and home prices have kept climbing year over year rather than falling to offset it.
Some buyers are turning to adjustable-rate mortgages to stay in the market. These loans start at a lower rate, about eight-tenths of a percentage point below a fixed loan, but the rate can rise later. Adjustable loans made up about 1 in 10 applications at the end of September, the highest share since October 2025. That lower starting payment comes with real risk if rates keep going up when the loan resets.
Washington is trying to slow the climb. The Treasury Department has been borrowing more through short-term debt and buying back some of its longer-term notes and bonds, aiming to reduce the supply of long-term government debt and ease the rates that mortgages track. So far, that effort has not stopped long-term rates from rising at the turn of the month.
A second weekly gauge points the same direction. Freddie Mac’s survey, released last Thursday, put the average 30-year rate at 7.28%, its sixth straight weekly increase and its highest since November 2023. The 15-year rate, popular with homeowners who refinance, rose to 6.60%. Freddie Mac’s next reading arrives Thursday, and the Mortgage Bankers Association’s next weekly report is due October 14.
For now, the math is simple for anyone shopping for a home. Every step up in rates shrinks how much house a family can afford on the same paycheck, and that step has come seven weeks running.
JBizNews Desk | Washington, D.C.
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