Mortgage rates rose sharply again in October as the U.S. treasury yields surged. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 7.33% in October, up 47 basis points (bps) from September. The rate reached 7.40% in early October, its highest level since 2023, before easing toward the end of the month. Since the conflict in the Middle East began, the 30-year mortgage rate has increased by approximately 128 bps. The 15-year fixed-rate mortgage averaged 6.66% in October, up 46 bps from September and 123 bps from the end of February. Compared with a year ago, the average 30-year and 15-year mortgage rates were higher by 108 bps and 117 bps, respectively.
The 10-year Treasury yield, a key benchmark for long-term borrowing, increased 21 bps to an average of 5.15% in October, although yields eased during the latter part of the month. Inflation concerns continued to put upward pressure on Treasury yields, as elevated energy prices stemming from the ongoing conflict with Iran contributed to accelerating inflation. Inflation accelerated to 3.7% in September from 3.4% in August. Energy prices were a major contributor, with fuel oil prices rising 15.3% and gasoline prices increasing 9.1% over the month.
At its latest meeting, the Federal Reserve held the federal funds rate unchanged at 3.75% to 4.00%. However, there were two dissenters who voted for a 25 bps increase. The Federal Open Market Committee (FOMC) described economic activity as expanding at a “strong pace,” an improvement from the “solid pace” noted in September. The committee pointed to resilient consumer spending and strong business investment as signs of continued economic strength, while noting that inflation remained elevated and uncertainty persisted.
