Mortgage Rates: Even with a Lower Fed Rate, Up 1.13 Points

The average 30-year fixed mortgage rate was 7.40% on Oct. 15, unchanged from the prior week and up from 6.27% a year earlier, according to Freddie Mac's weekly survey. Over the same year the Fed's policy rate went the other way. The upper end of its target range was 4.00% on Oct. 15, down from 4.25% a year earlier, according to Federal Reserve data on FRED. The 10-year Treasury yield was 5.10% on Oct. 15 against 3.99% on the matching Thursday last year, according to FRED, a rise of 1.11 points that is almost the same as the 1.13 point rise in the mortgage rate, by TradeFlock's estimate.

That matters because traders are debating whether the Fed will raise rates again, yet a hold or a hike at its next meeting would not by itself undo a year in which borrowing costs for homebuyers rose while the policy rate fell.

Fed Rate Hike Odds Fell This Week

The Fed raised its target range by a quarter point to 3.75% to 4.00% by a 12 to 0 vote, according to its September statement, effective Sept. 17. Its next meeting is on Oct. 27 and 28, with the decision due on Oct. 28. According to Prediction.com, the CME FedWatch probability of an October hike jumped from 21% to 54% after September consumer prices rose 3.7% from a year earlier, then eased to about 28% on Oct. 15 and to roughly 13% to 15% after Chair Kevin Warsh declined to preview the decision on Oct. 16. Prediction.com also reported that Polymarket priced "no change" at 86% on Oct. 17, and its live widget, which tracks Polymarket and Predict.fun, showed 87% when TradeFlock checked at about 7:05 PM IST on Oct. 17. Those are market odds, not Fed guidance.

What the Monthly Payment Looks Like

On a $400,000 loan with a 30-year fixed term, principal and interest come to $2,468.07 a month at 6.27% and $2,769.52 at 7.40%. That is about $301 more a month, or roughly $3,617 more a year, a 12.2% increase, by TradeFlock's estimate. The calculation leaves out taxes, insurance and points, and applies the survey average to a hypothetical loan. Shorter loans moved too. The 15-year fixed rate averaged 6.71% against 5.52% a year ago, a rise of 1.19 points, which on the same $400,000 loan with a 15-year term takes the monthly payment from $3,272.58 to $3,530.77, about $258 more, by TradeFlock's estimate.

The Gap to the 10-Year Yield

Over the past year the mortgage rate has stayed within a band around the 10-year yield. By TradeFlock's estimate, the weekly gap between the Freddie Mac rate and the 10-year yield on the same Thursday ranged from 1.81 points to 2.34 points between September 2025 and this month. It was 2.30 points on Oct. 15 and 2.28 points on the matching date last year. On Sept. 10, the Thursday before the Fed's hike, the gap was 1.81 points, the narrowest in that period. Since then the mortgage rate has risen 0.64 points to 7.40% while the 10-year yield rose 0.15 points to 5.10%.

The comparison has limits. Freddie Mac averages rates from loan applications received from the prior Thursday through Wednesday, while the 10-year figure is a single day's close, so the gap is approximate. Freddie Mac's survey is also built from conforming purchase loan applications sent to it by lenders, so it does not cover jumbo loans or every lender. The data also do not show why the gap narrowed and then widened, and TradeFlock is not asserting a cause.

What to Watch Next

Freddie Mac publishes a new survey each Thursday at noon ET, so the next reading comes on Oct. 22, ahead of the Oct. 28 decision. If the Fed holds as markets expect, the policy rate stays at 3.75% to 4.00%, and the mortgage rate would still depend on where long-term yields settle. TradeFlock has covered how the Bank of England responded to the Fed's hike and how homebuilder shares reacted when mortgage rates backed up through 6.5%.

Cover photo: Residential Street in Key West, Florida by Julian Lupyan / Wikimedia Commons, CC0 (cropped and resized).