Mortgage rates reach 7.40% as buyer costs mount

The typical 30-year fixed mortgage stood at 7.40% on Oct. 8, Freddie Mac reported. That was 12 basis points higher than the prior week and nearly a full percentage point above the 6.49% recorded on July 9. Realtor.com senior economist Joel Berner said an increase to 8% before 2026 ends remains possible, though historical patterns make such a jump unusual. Rates last approached that level in 2023, when they peaked at 7.79% on Oct. 26.

For buyers, the larger strain may be combining today’s financing costs with the cash needed upfront. A median-priced home now costs $424,500, compared with $115,810 during the mid-1990s. A 20% contribution at closing would equal $84,900 today versus $23,162 then. Realtor.com’s latest figures put the median down payment at $27,100, a 9.2% annual decline. Meanwhile, the estimated typical monthly bill has increased 3.5%, or $80, over the past year and 74.2%, or $1,012, since 2021.

Higher borrowing costs also discourage owners with cheaper existing loans from selling. Berner said that effect now reaches borrowers holding 5% and 6% mortgages, not only those below 4%. The result is fewer homes coming onto a market where existing-home transactions are already near lows not seen in almost three decades.