Photo: Zetong Li via Unsplash.
Freddie Mac's weekly average for a 30-year fixed mortgage was 7.40% for the week ending October 15, unchanged from the week before. A year earlier it was 6.27%. If you're shopping on Oahu right now, that gap matters more than any list-price drop you'll see this month.
How fast the rate moved
Back on September 3 the average was 6.71%. Since then it climbed every week until it held flat at 7.40% last week: 6.76%, 6.95%, 7.03%, 7.28%, then 7.40%, according to the weekly series that FRED and Mortgage News Daily both publish from Freddie Mac's data. The 15-year fixed sits at 6.71%, per Freddie Mac.
These are national averages. The quote you get from a Hawaii lender will differ depending on credit, down payment, loan type and points, so treat them as a benchmark, not a promise.
What it does to a payment
Here's the math I run when a buyer tells me their budget. Take a $1,000,000 loan on a 30-year fixed, principal and interest only:
- At 6.27% (the rate a year ago): about $6,170 a month.
- At 6.71% (early September): about $6,459 a month.
- At 7.40% (today's average): about $6,924 a month.
That's roughly $465 more than six weeks ago and about $755 more than a year ago, on the same loan. Taxes, insurance, and HOA fees come on top of that. I do this calculation before we look at a single home, because a buyer who qualified in August may not qualify for the same price today.
Prices haven't fallen to match
Oahu's single-family median hit a record $1,242,500 in June, up 10.4% from a year earlier, as Hoodline reported and the Honolulu Star-Advertiser covered in its own headline. That's a June figure, and I'd read it as a snapshot of where things were before the rate jump, not where they are now. Prices on Oahu tend to move slower than rates, because owners here don't have to sell and many are sitting on low fixed rates they won't give up.
On a $1,242,500 home with 20% down, the loan is about $994,000. At 7.40% the principal and interest is roughly $6,880 a month. At last year's 6.27% it was about $6,130. Same house, about $750 a month apart.
What I tell buyers to do
The first thing I ask is what monthly number they're comfortable with, not what price they want. Then we back into the price. More than once I've had a buyer fall in love with a home and then realize the payment doesn't work at the current rate, and it's a lot easier to find that out on paper than in escrow.
A few things are worth asking your lender about: whether a seller credit can pay for a temporary rate buydown, what it costs to lock for 45 or 60 days instead of 30, and whether a shorter-term loan makes sense given your cash flow. I don't push any of these. I just want you to have numbers for each before you write an offer.
If you're a seller, expect buyers to be pickier about price and more interested in credits. Homes priced for last spring's rates are the ones I see sit.
Frequently asked questions
Should I wait for rates to drop?
I can't predict rates and neither can anyone else. What I can tell you is that you can refinance a loan later if rates fall, but you can't go back and un-pay a price that was too high. Decide based on whether the payment fits your life today.
Does 7.40% mean my lender will quote me 7.40%?
Not necessarily. It's a national average of Freddie Mac's survey. Your quote could be higher or lower. Get at least two written quotes the same day so they're comparable.
Is the Oahu market about to crash?
I don't see evidence of that in the numbers I've verified. Higher rates tend to cool demand and stretch time on market first. Prices usually follow later, if they follow at all.
This is general information, not legal, tax, insurance or financing advice. Payment examples are illustrative and exclude taxes, insurance, HOA fees and mortgage insurance.
Sources: Freddie Mac Primary Mortgage Market Survey; FRED, 30-Year Fixed Rate Mortgage Average; Mortgage News Daily, Freddie Mac history; Hoodline; Honolulu Star-Advertiser.
Tony Kawaguchi, R(B), The Kawaguchi Group, eXp Realty. Hawaii broker, license RB-21841, 20+ years and $1B+ in Oahu sales, leading a team of 20+ agents. If you want to see what your own payment looks like at today's rates, call or message me and I'll run the numbers with you.