Average long-term US mortgage rate churns upward to its highest level in
nearly 3 years at 7.28%
[October 02, 2026] By
MICHELLE CHAPMAN
NEW YORK (AP) — The average long-term U.S. mortgage rate jumped this
week to its highest level in nearly three years.
The benchmark 30-year fixed-rate mortgage rose to 7.28% from 7.03% last
week, mortgage buyer Freddie Mac said Thursday, the biggest leap in four
years. A year ago, the average rate was 6.34%.
It is the sixth consecutive week that mortgage rates have increased.
The average rate is now the highest it’s been since Nov. 22, 2023, when
it reached 7.29%, and it's not climbed this fast week-to-week since
October 2022.
Borrowing costs on 15-year fixed-rate mortgages, often sought by
borrowers refinancing a home loan, also climbed this week. That average
rate increased to 6.60% from 6.42% last week. A year ago, it was at
5.55%.
Higher mortgage rates can add hundreds of dollars a month to borrowers’
costs, limiting homebuyers’ purchasing power. As rates rise, that can
also lead prospective home shoppers to delay buying.
In late February, the average rate on a 30-year mortgage briefly dipped
to 5.98%, its lowest level going back to late 2022. The roughly 1
percentage point increase in the rate since then translates roughly into
an additional $276 a month cost for a borrower financing a $400,000 home
loan at the current average rate.
Depending on a borrower’s income, credit and other factors, they may
qualify for a rate on a 30-year mortgage that is below or above the
current average.
The housing market has been stuck in a rut this year in large part
because of elevated mortgage rates, which have been climbing in the
months since the U.S. and Israel attacked Iran in late February.
Mortgage rates are influenced by inflation, Federal Reserve policy and
bond-market investors’ expectations for the economy, among other
factors. They generally follow the trajectory of the 10-year Treasury
yield, which lenders use as a guide to pricing home loans.
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 Expectations of higher inflation
amid surging oil prices have pushed up the 10-year Treasury yield,
which was at 3.97% in late February, before the war began. It surged
to 5.27% in midday trading on the bond market Thursday. That puts it
roughly back to where it was in 2007, on the eve of the real
estate-induced financial crisis.
High yields slow the overall economy by making it more expensive for
everyone to borrow money, while undercutting prices for stocks and
other investments.
The U.S. housing market has been in a slump since 2022, when
mortgage rates began to climb from pandemic-era lows. Sales of
previously occupied U.S. homes were essentially flat last year,
stuck at a 30-year low.
Last month the National Association of Realtors said that existing
home sales fell 2% in August from July to a seasonally adjusted
annual rate of 3.98 million units. That was their slowest annual
pace in more than a year.
And many potential homeowners are now hitting the brakes.
Mortgage applications, which include loans to buy a home or
refinance an existing mortgage, tumbled 6% last week from the
previous week, according to the Mortgage Bankers Association. This
marks the fourth straight weekly drop.
Applications for loans to refinance existing mortgages also
declined.
The elevated mortgage rates are driving more prospective homebuyers
to adjustable-rate mortgages, or ARMs. Such loans, which typically
offer lower initial interest rates than traditional 30-year,
fixed-rate mortgages, accounted for more than 10% of all mortgage
applications last week, MBA said.
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