Mortgage Rates Hold at 7.24% as December Fed Hike Odds Hit 90%

The average 30-year US mortgage rate sat at 7.24% at the end of October, Freddie Mac says, leaving homebuyers to guess whether the Federal Reserve will make their next move cheaper or pricier. The Fed left its benchmark rate parked at 3.75% to 4% on October 28. That hold wasn't unanimous — two officials pushed for a hike.

Hotter October inflation has done the rest. Market odds of a December increase have climbed to roughly 90%. Here's the catch for anyone hunting a house: the Fed doesn't set mortgage rates directly, and once a fixed-rate loan is signed, its rate doesn't budge.

The math bites at the margins. On a $300,000, 30-year loan, monthly principal and interest runs about $1,996 at 7%, about $2,047 at 7.25% and about $2,098 at 7.5%. That half-point gap works out to roughly $102 more each month and about $36,625 across the full term.

Most owners never get there. A buyer who sells after five years would pay about $7,562 more under the higher rate. For perspective, rates have swung from a record 18.63% in 1981 down to a low of 2.65% in 2021.