This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
Interest rates hit new highs from September 25th to October 1st. The daily average for 30-year fixed mortgage rates surged to 7.60% (up 17 bps),while average 30-year refinance rates reached 7.75% (up 24 bps). Weekly MBA benchmark rates rose to 7.30%. Application volume dropped, the total mortgage demand dropped 6.0% week-over-week marking the fourth consecutive weekly decline driven by a 4.3% drop in purchase applications and an ongoing freeze in refinance activity. Broad pressure on 10-year Treasury yields, persistent headline inflation, and expectations for continued tight Federal Reserve monetary policy remain the core catalysts pushing borrowing costs upward.
The strategy is to shift client conversations away from waiting for rate drops. Emphasis should be on total monthly cost strategies, such as temporary rate buy-downs (2-1 or 1-0) and long-term equity growth. Serious buyers could benefit from reduced bidding competition. Rate buy-down concessions rather than list-price reductions could maximize monthly savings for buyers.
FedWatch: Target rate (in bps) possibilities, according to the CME Group (as of 10/01/2026– 12:00 PM EST):
PCE Inflation Remains Elevated
NAHB Remodelers: What the Data Says
Economic Growth Continued Across Most States inthe Second Quarter
September 2026 Housing Trends: Rates Top 7%, Price Cuts Surge
Rate Risks
Numerous surveys of inflation expectations of consumers and investors do not show them being worried that the Fed will lose control over inflation. Thus, the break even inflation rate, the bond market’s indicator of expected inflation, remains modest. However, investors seem increasingly concerned by how much the Fed may have to raise rates to keep inflation in check, along with added uncertainty about how new Chairman Warsh will lead. - Elliot Eisenberg, Economist
News You Can Use:
· Speech by Governor Cook on the dual mandate in rural America - Federal Reserve Board
· Mortgage rates jump to near 3-year high, causing demand to drop
· Fed's Williams: One more hike likely this year is likely enough
· Homeowners are sitting on record equity – and not using it
· US Consumer Confidence Fell in September
· US August Dallas Fed Trimmed mean PCE inflation at 1.9% vs 2.2% expected
· USGDP Final for Q2 2.2% vs 1.5% estimate
· Sellers Slash Prices at Historic Pace To Lure Buyers Sidelined by Mortgage Rates
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 10/01/2026, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. Actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 10/01/2026 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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