Mortgage Rates at 7.40%: Could Higher Borrowing Costs Reset Housing Over Time?

Thinking about buying a home? Mortgage rates are close to their highest level in about three years. Should you buy now, or wait? Here is what the numbers show.

Freddie Mac reported that the average 30-year fixed mortgage rate was 7.40% on 8 October 2026, up from 7.28% the week before. Mortgage rates tend to follow the 10-year Treasury yield, which has also risen. For context, see Karmactive’s earlier coverage of the 30-year rate surpassing 7% and Treasury yields and mortgage rates.

Higher rates can slow demand because fewer buyers qualify for the same loan amount. They can also discourage current owners from selling if they would have to replace a low-rate mortgage with a more expensive one. Whether that produces lower prices, more construction aimed at first-time buyers or a prolonged shortage differs by local market; the current rate alone cannot settle that debate.

If you plan to buy in the next year, compare the full monthly payment, not just the listing price. On a $400,000, 30-year loan, the gap between 6% and 7.40% is about $372 a month. The payment at 6% is about $2,398, and at 7.40% it is about $2,770. These figures are principal and interest only, before taxes and insurance.