Mortgage rates for October 9: Approaching 8%

• The average for a 30-year fixed rate mortgage was 7.81% as of October 9. 
• The U.S. added nearly twice as many jobs in September as expected, a sign of the economy’s resilience. 
• The median monthly mortgage payment in the U.S. hit another all-time high last week. 

Affordability challenges plaguing homebuyers are only getting more intense as mortgage rates surged to a new 23-year high on October 9. The average for a 30-year fixed-rate mortgage was 7.81%, the highest since September 2000, according to Mortgage News Daily. 

The combination of high rates and rising home prices have pushed the median monthly mortgage payment to another all-time high, after several weeks of consecutive records, according to Redfin. The typical homeowner is now paying $2,710 a month, up 10% from this time last year.

A mix of factors has contributed to the recent rate surge, including the Federal Reserve’s pledge to keep federal interest rates “higher for longer” as it continues working to tame inflation. 

The most recent bump was triggered in part by an unexpectedly strong September jobs report. The U.S. added 336,000 jobs last month, nearly twice as many as economists projected. (Though it’s worth noting that wage growth slowed, which could help cool inflation.)

“This report certainly surprised the market, which had been expecting a slowdown and longer-term rates jumped in response,” said Mike Fratantoni, senior vice president and chief economist with the Mortgage Bankers Association. “Mortgage rates will follow which will likely mean that lending activity, which was already at a multi-decade low, is not going to pick up anytime soon.”

While more jobs are good news for workers, it’s another sign to the Fed of the economy’s resilience, which could help them solidify a decision to hike rates one more time this year. And, the more the federal funds rate goes up, the more likely it is that mortgage rates will go up too.

For now, the average for a 15-year fixed-rate mortgage stands at 7.12%, according to Mortgage News Daily. The average for a jumbo mortgage is 7.90%, while the average for a 5/1 ARM is 7.12%. 

This time last year, mortgage rates were around 6.8% as they crept toward 20-year highs in October and November. They’re more than double what they were during the peak of the pandemic homebuying frenzy. 

Mortgage rates closely track the 10-year Treasury yield, which goes up with the federal funds rate. The 10-year Treasury yield also rose with the strong jobs report last week, briefly hitting a 16-year high Friday before dipping slightly.

With both the 10-year Treasury as well as the federal funds rate expected to stay elevated through the end of the year, mortgage rates will likely stay high as well. Fannie Mae expects the average for a 30-year fixed-rate mortgage to be 7.1% by year’s end, while the Mortgage Bankers Association expects it to fall to 6.3%.

Homebuyers continue to be squeezed by limited inventory and rising home prices. The number of new listings was down 3.4% for the four weeks ending October 1, compared with that time last year, according to Redfin. It’s the slimmest decline since July 2022. However, Redfin attributes the smaller decline to the fact that rising mortgage rates were already starting to slow the market this time last year. 

The median sale price, meanwhile, was $370,900, up 2.9% from the previous year. Prices have remained elevated despite high mortgage rates because of the limited supply. 

Mortgage applications were down 6% for the week ending September 29, according to the Mortgage Bankers Association. “As a result [of rising mortgage rates], mortgage applications grounded to a halt, dropping to the lowest level since 1996,” said Joel Kan, MBA’s vice president and deputy chief economist. “The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market.”

If you find yourself needing to buy now, however, real estate pros have an adage for you: “marry the house, date the rate.” Translation: If you see your dream home now, you don’t necessarily have to walk away just because mortgage rates are high. You can always refinance once rates drop. 

Just a three-quarter point decline is enough to make refinancing worth it. And, as you look for the best possible rate right now, make sure you compare offers among multiple lenders. Getting quotes from four lenders can save you up to $1,200 every year on your mortgage, according to a study by Freddie Mac. 

On average, the interest rate for a 30-year mortgage on October 9 was 7.81%, up from 7.61% on October 2. 

On average, the interest rate for a 15-year mortgage on October 9 was 7.12%, up from 6.91% on October 2. 

On average, the interest rate for a 30-year fixed rate jumbo mortgage on October 9 was 7.90%, up from 7.60% on October 2. 

On average, the interest rate for a 5/1 ARM on October 9 was 7.12%, up from 7.10% on October 2.

Mortgage rates are influenced by a variety of factors, including:

• Your credit score
• Down payment
• Your debt-to-income ratio (DTI)
• The type of loan you’re getting
• Loan term
• Interest rate type (fixed vs. adjustable)
• Inflation and the overall economy
• The Federal Reserve (which doesn’t set mortgage rates, but it certainly influences them)

If you need to move now, even as rates reach multi-decade highs, real estate pros have an adage for you: “marry the house, date the rate.” Translation: If you see your dream home now, you don’t necessarily have to walk away just because mortgage rates are high. You can always refinance once rates drop. 

Just a three-quarter point decline is enough to make refinancing worth it. And, as you look for the best possible rate right now, make sure you compare offers among multiple lenders. Just getting quotes from four lenders can save you up to $1,200 every year on your mortgage, according to a study by Freddie Mac. 

Refinancing is not the only strategy for navigating high rates, however. Here are a few tips for getting a better rate on your mortgage.

• Shop around: You can save as much as $1,200 a year on your mortgage payments just by comparing quotes from at least four lenders, according to Freddie Mac. Most mortgage lenders let you answer a few questions online to start the process, making it easy to learn about your options.
• Consider different types of loans: Fifteen-year fixed-rate mortgages, adjustable rate mortgages, and government-backed mortgages all have different rates. The average for a 15-year fixed-rate mortgage was 6.81% on September 26, almost 0.70 percentage points lower than the rate for a 30-year fixed-rate mortgage. If you go that route, just be ready for larger monthly payments, since you’ll be chipping away at the loan over half as many years.
• Pay for discount points: Mortgage points generally cost about 1% of the total loan amount but can trim your mortgage rate anywhere from ⅛ to ½ a percentage point. If the seller is eager to unload their home, you might even be able to get them to pay for the points.
• Make a bigger down payment: If you can swing it, the more you pay now, the less you’ll pay over the life of the loan, since you’ll have a lower principal. What’s more, mortgage lenders may reward you with a lower rate, since they’re taking on less.

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as the Home and Financial Services Editor for the Hearst E-Commerce team. Email her at [email protected].