Freddie Mac’s 30-year fixed average held at 7.40% this week, the second week in a row it has not budged. Here is what is holding it up there, and what it does to a real payment.
Where Rates Stand This Week
Freddie Mac’s survey for the week ending October 15 put the average 30-year fixed at 7.40%, right where it landed the week before. Sam Khater, their chief economist, summed it up about as plainly as it gets: “The average 30-year fixed-rate mortgage remained unchanged this week.”
The 15-year averaged 6.71%, down a hair from 6.73%. A year ago those same two numbers were 6.27% and 5.52%, so we are sitting a little over a full point higher than we were last October.
One thing worth keeping in mind: that is a national average built from a weekly survey of lenders. It is not a quote. Your number depends on your credit, your down payment, the loan type, and what the market is doing the morning we lock you.
Why Rates Are Sitting Up Here
The short version is the bond market. Mortgage rates track the 10-year Treasury yield, and the 10-year averaged 5.28% the week of October 8. Realtor.com senior economist Joel Berner pointed to inflation expectations, a broad bond selloff, and rising government borrowing needs as the pressure behind it.
When investors want more yield to hold a 10-year Treasury, they want more yield to hold a mortgage bond too, and that shows up on the rate sheet we work off of every morning.
The Fed Meets October 27 and 28
Back on September 16 the Fed raised its target range a quarter point to 3.75% to 4%, its first increase since July 2023. The vote was 12 to 0. Chair Kevin Warsh pointed to inflation running above target for more than five years, a labor market still in decent shape with unemployment around 4.1%, and summer readings that did not show much improvement.
Their own September projections showed a median expectation of one more quarter-point increase before the year is out, and the next meeting is October 27 and 28.
Here is the part that gets twisted around, and it is worth saying every time: the Fed does not set your 30-year fixed. The Fed sets a short-term overnight rate. Your mortgage rate comes out of the bond market. They are related, they are not the same thing, and plenty of times they have moved in opposite directions.
What This Looks Like on a Real Payment
Take the Houston median sale price of $325,000 with 20% down, so a loan of $260,000. At 7.40%, principal and interest runs about $1,800 a month. At last October’s 6.27%, that same loan would have been roughly $1,604. So the last twelve months cost about $196 a month on an identical house.
That is a real number and we are not going to pretend otherwise. But it also tells you something useful, which is that half a point of rate is worth about $88 a month on that loan. Half a point is the kind of thing a buydown or a different loan structure can actually move, and that is a conversation available today instead of one that waits on the Fed.
What We’re Telling Clients
We would not make a big decision off one week’s headline, in either direction. Rates have been bouncing around, and nobody we know has gotten good at calling them in advance.
If you are pre-approved and the payment works, we would look hard at the house. You can refinance a rate later on. You cannot go back and buy the one that sold to somebody else.
And if the payment is close but not quite there, a temporary buydown is worth asking about. A 2-1 buydown takes your rate down two full points the first year and one point the second, which on that $260,000 loan is roughly $340 a month in year one. Sellers will often pay for it as a concession rather than cut the price, and with Houston inventory at 5.5 months a fair number of them are open to it.