Mortgage Rates Rise for Seventh Straight Week to 7.4%
Mortgage rates kept climbing this week, reaching their highest point in nearly three years and squeezing would-be buyers across the Philadelphia area and the nation.
The average rate on the benchmark 30-year fixed mortgage rose to 7.4% for the week ending Oct. 8, up from 7.28% the week before, according to Freddie Mac’s Primary Mortgage Market Survey. The increase marks the seventh straight weekly rise, a streak that has added roughly three quarters of a percentage point since late August.
The 15-year fixed mortgage also moved higher this week, averaging 6.73% compared with 6.6% last week, Freddie Mac reported. A year ago, the 30-year rate stood at 6.3%.
Rising borrowing costs are tracking a climb in longer-term government bond yields. The 10-year Treasury yield averaged 5.28% this week, up 9 basis points from the prior week, according to Realtor.com. Mortgage rates tend to follow the 10-year Treasury because most home loans are refinanced or paid off within about a decade.
Realtor.com senior economist Joel Berner blamed a combination of inflation expectations, a broad selloff in the bond market, and rising federal deficits that require fresh debt issuance. That cocktail is pushing bond yields higher, he said, and mortgage rates are following.
The run-up is hitting household budgets directly. On a $400,000 home loan, the seven-week climb in rates translates to roughly $200 more a month in principal and interest payments, according to Barron’s calculations. Nationally, the monthly payment to buy the median existing home is now several hundred dollars higher than it was before rates began this latest surge.
Early signs of strain are already showing. Barron’s reported that sellers are cutting prices at a faster pace and newly pending sales are falling, while the home construction stock index has dropped more than 10% since the end of August. The Wall Street Journal found that sellers are increasingly offering concessions such as covering closing costs or paying to lower a buyer’s rate temporarily.
For buyers, economists say shopping aggressively matters more than ever. Freddie Mac chief economist Sam Khater noted that comparing multiple lenders and negotiating can potentially save borrowers thousands of dollars over the life of a loan.
Federal Reserve Gov. Christopher Waller said Thursday that the central bank may need to raise its benchmark rate further to bring inflation down, though he added that the hikes do not need to come at consecutive meetings. With inflation still running above the Fed’s target, meaningful relief in mortgage rates appears unlikely in the near term.
Analysts at TD Cowen expect the 30-year rate to ease only modestly, to 6.8% by year’s end and 6.6% by the end of 2027. Their caution: most existing homeowners hold older, lower rates they are unwilling to give up, so any decline may not unlock a flood of new listings.
For Philadelphia buyers, the practical guidance is straightforward. Get preapproved early so you know exactly what the higher rates mean for your budget, ask sellers about credits or rate buydowns that have become common, and do not skip the comparison step between lenders. In a 7.4% market, the fine print of the loan can matter as much as the price of the house.