A small white farmhouse rising beneath a hot-air balloon over autumn Vermont hills, illustrating rising mortgage rates

Quick Answer

Freddie Mac's average 30-year fixed mortgage rate rose to 7.40% on October 8, 2026, up from 7.28% a week earlier and 6.30% a year ago, the highest since November 2023. On a $400,000 loan, principal and interest is about $2,770 a month, $294 more than a year ago. The Fed meets October 27-28.

Mortgage rates have climbed for seven straight weeks.

Freddie Mac's weekly survey put the 30-year fixed at 7.40% on October 8, up from 7.28% a week earlier and 6.30% a year ago. The 15-year fixed rose to 6.73%. That is the highest 30-year reading since November 2023, and 64 basis points above where rates stood on September 10.

Why rates keep rising

The Federal Reserve raised its benchmark rate on September 16, to a range of 3.75% to 4.00%, its first hike in three years. The minutes of that meeting, released October 7, were blunt: "all participants viewed a higher target range for the federal funds rate as appropriate," and most officials expected at least one more increase this year.

The data since then have cooled. Employers added just 29,000 jobs in September, and unemployment rose to 4.2%. Core PCE inflation, the Fed's preferred gauge, slowed to 3% in August. Futures markets now price about a 17% chance of a hike at the October 27-28 meeting and about 70% by December, per Yahoo Finance.

The Fed does not set mortgage rates. The bond market does, and it is pricing more tightening, not less.

The math

Principal and interest only, on a 30-year loan of $400,000: at 7.40%, the payment is $2,770 a month. At last year's 6.30%, it was $2,476. That is $294 more every month, or $3,528 a year.

Turn it around. A buyer whose budget tops out at $2,500 a month could borrow about $403,900 a year ago. Today the same payment supports about $361,100. That is $42,800 less house, a 10.6% cut in buying power.

In Vermont terms: with 20% down on the statewide median of $438,280, per Redfin, the payment is $2,428 at 7.40%, versus $2,170 at 6.30%. That is $257 more a month for the typical Vermont home.

Buyers are feeling it. The Mortgage Bankers Association's application index fell 4.2% in its latest weekly survey.

What to do

If you are buying, stop trying to time the Fed. The market's own odds favor another hike over a cut by year end. Control what you can. Get quotes from at least three lenders; Freddie Mac's chief economist, Sam Khater, notes that comparing quotes can save borrowers thousands over the life of a loan. Then use the leverage rising inventory gives you. A seller-paid buydown from 7.40% to 7.15% on a $400,000 loan saves about $68 a month, every month you keep the loan. Your lender will quote its exact cost. Ask for it before you ask for a price cut.

If you are selling, price for a 7.40% buyer. That buyer has about 10.6% less room than last year's buyer on the same payment. Offering a credit toward a rate buydown widens your pool without lowering your headline price.

If you hoped to refinance this fall, wait. The math does not work at 7.40%.

Three dates to watch: the September inflation report on October 14, Freddie Mac's next survey on October 15, and the Fed's decision on October 28. Plan for 7.40%. Anything better is a bonus.

Want the numbers for your town? Get the latest Vermont Real Estate Market Report, or call me at 802-233-4107.

Frequently Asked Questions

What is the average 30-year mortgage rate right now?

Freddie Mac's average 30-year fixed rate was 7.40% on October 8, 2026, up from 7.28% the week before and 6.30% a year earlier. The 15-year fixed averaged 6.73%. Freddie Mac publishes a new survey every Thursday.

How much more is a mortgage payment at 7.40% than a year ago?

On a $400,000, 30-year loan, principal and interest is about $2,770 a month at 7.40%, versus about $2,476 at 6.30%. That is about $294 more per month, or $3,528 a year, before taxes and insurance.

Will the Fed raise rates again in October 2026?

Markets see it as unlikely but possible. After the Fed hiked on September 16, futures priced about a 17% chance of another hike at the October 27-28 meeting and about a 70% chance by December, following a weak September jobs report.

Should Vermont buyers wait for mortgage rates to fall?

Waiting is a bet against the Fed's stated direction. A better plan is to buy what the payment supports at today's rate, shop several lenders, and negotiate seller credits toward a rate buydown while inventory is rising.

Sources

Tony Walton, Principal Broker, New England Landmark Realty, Waterbury Center, Vermont. 802-233-4107.