Mortgage rates have reached their highest level in nearly three years, increasing the cost of financing the same home. For San Diego buyers, this is a good time to update the payment behind your price range. For sellers, it makes understanding a buyer’s budget more important when choosing a price and evaluating offers.
Freddie Mac’s October 8 report puts the average 30-year fixed mortgage rate at 7.40%, up from 7.28% last week and 6.30% a year earlier. The 15-year average is 6.73%. The last higher 30-year reading was 7.44% on November 16, 2023.
These are national weekly averages drawn from mortgage applications. Use a current lender quote for the financing you are considering.
What the increase means in dollars
For a hypothetical new $800,000 mortgage, repaid over 30 years at a fixed rate, the principal-and-interest payment would be approximately:
| Interest rate | Monthly principal and interest |
|---|---|
| 6.30% | $4,952 |
| 7.40% | $5,539 |
That is about $587 more each month for the same loan amount. The example excludes property taxes, homeowners insurance, mortgage insurance and HOA dues.
A buyer with a firm monthly budget may need a smaller loan, more cash down or a different home. Check the complete housing cost and the savings you would have left after closing before deciding which adjustment makes sense.
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Buyers: compare the full loan cost before making an offer
If your preapproval or payment estimate used an earlier rate, ask your lender to update it before you settle on an offer. Compare Loan Estimates for the same kind of loan, including the interest rate, upfront lender charges and cash needed to close. Check whether the rate is locked and when that lock expires.
A seller credit toward closing costs may help preserve cash. Paying points may lower the interest rate in exchange for an upfront charge. Ask the lender to compare the permitted options with a lower purchase price, showing both the monthly payment and your remaining savings.
I would choose a payment you can comfortably carry under the proposed loan terms and keep a reserve for repairs and unexpected expenses. Any future refinancing should improve an already workable purchase.
Sellers: make your price and terms work together
Higher borrowing costs can narrow what a financed buyer can afford. Set your asking price using relevant recent sales and the homes buyers can choose from now. Look closely at condition, competing prices and the response to your listing.
When an offer includes a request for a credit, compare your net proceeds with those from a price reduction. Consider whether the proposed help addresses the buyer’s actual financing need, alongside the loan approval, contingencies and closing schedule.