Borrowing costs for homebuyers in St. Johns County jumped Thursday, Oct. 1, with the average 30-year fixed-rate mortgage climbing to 7.28%.

The national average reached its highest level since Nov. 22, 2023, when it stood at 7.29%. It rose 25 basis points, or a quarter of a percentage point, from 7.03% a week earlier, marking the sixth consecutive weekly increase, Florida Realtors reported.

Freddie Mac releases its Primary Mortgage Market Survey each Thursday.

A year ago, the 30-year rate averaged 6.34%.

For a buyer purchasing a $400,000 home with 20% down, the difference between a 6.34% and 7.28% mortgage rate would add about $200 a month to principal and interest on a $320,000 loan. If the loan were held for the full 30-year term, the higher rate would result in roughly $72,000 more in total interest.

The calculation does not include property taxes, homeowners insurance, association fees or other housing expenses.

St. Johns County buyers face affordability pressure

The rate increase comes as St. Johns County remains the most expensive county in the six-county Northeast Florida region.

In June, the median price for a single-family home in St. Johns County was $579,000, down 0.2% from May. The county's Home Affordability Index remained at 57, the lowest in the region, according to the Northeast Florida Association of Realtors.

An affordability index of 100 represents the point at which a median-income household has enough income to qualify for a mortgage on a median-priced home under the index's assumptions. A reading below 100 indicates that the median household falls short of that threshold.

St. Johns County had 610 closed single-family home sales in June, up 1.8% from May. Active inventory stood at 1,841 homes, representing a three-month supply.

Higher mortgage rates particularly affect buyers entering the market or purchasing new construction because they must obtain financing at current rates unless they qualify for a builder or lender incentive.

Builders can use mortgage-rate buydowns and other incentives to reduce borrowing costs for buyers.

Homeowners with mortgages carrying substantially lower rates may also have a financial incentive to remain in their existing homes rather than sell and finance another purchase at current rates.

The average 15-year fixed-rate mortgage, often used by homeowners refinancing, rose to 6.60% from 6.42% a week earlier. A year ago, it averaged 5.55%.

7% rate carries psychological weight

Lisa Sturtevant, chief economist at Bright MLS, warned in late September that mortgage rates moving above 7% could affect buyers beyond the immediate increase in monthly payments.

"Beyond the immediate financial constraints, the 7% threshold is a foreboding psychological barrier … Crossing this mark could create a chilling effect on the market," Sturtevant told The Seattle Times.

The average 30-year rate has since climbed another quarter of a percentage point, from 7.03% on Sept. 24 to 7.28% on Oct. 1.

Consumer sentiment edges higher

Florida consumer sentiment edged up in September after six consecutive months of declines.

The University of Florida's consumer sentiment index increased three-tenths of a point to 67.7 from a revised August reading of 67.4, according to the university's Bureau of Economic and Business Research.

Hector H. Sandoval, director of the bureau's Economic Analysis Program, cautioned that economic developments during the second half of September might not yet be fully reflected in the results.

The survey was conducted Aug. 1 through Sept. 24.

Sandoval noted that mortgage rates had moved above 7% late in the survey period, further increasing household borrowing costs.

Florida Realtors is scheduled to release its September and third-quarter housing market report Friday, Oct. 16. The report will provide a broader look at Florida housing activity as mortgage rates climbed through September.