Mortgage Rates Hit 7.40 Percent, Highest Since November 2023, as Fed Rate Hike Ripples Through Housing

The average 30-year fixed mortgage rate climbed to 7.40 percent as of October 8, 2026, up from 7.28 percent the prior week, according to Freddie Mac data. It was the seventh consecutive weekly increase and the highest level since November 2023.

The 15-year fixed rate also rose, reaching 6.73 percent from 6.60 percent the week before.

The increase follows the Federal Reserve's September 16 decision to raise the federal funds rate by 25 basis points to a target range of 3.75 to 4.00 percent, the first rate hike in more than three years. Rising Treasury yields, driven by persistent inflation and fiscal concerns, have pushed mortgage rates higher.

For a $300,000 mortgage, the jump to 7.40 percent adds roughly $220 per month in principal and interest compared to the 6.30 percent rates seen a year ago. Some estimates put the added monthly cost for a median-priced home at about $268.

The income needed to qualify for a median-priced home under standard affordability guidelines has risen from about $88,600 to $100,100, excluding taxes and insurance.

Pending home sales have declined as higher rates push buyers to the sidelines. The lock-in effect continues to keep inventory tight, as existing homeowners with lower-rate mortgages are reluctant to sell and take on a new loan at current rates.

Adjustable-rate mortgages have climbed to nearly 10 percent of applications, the highest share since October 2025, as some buyers seek lower initial payments.