Colorado Springs Mortgage Rates Hit 7.28%: What's Driving Them and What It Means for You

If you're shopping for a home in Colorado Springs, you've watched the number climb. Freddie Mac's weekly survey put the average 30-year fixed rate at 7.28% on October 1, up from 7.03% last week and 6.34% a year ago. That makes six weekly increases in a row, and daily rate trackers run higher, near 7.4%.

Why Are Mortgage Rates Over 7% Right Now?

Mortgage rates crossed 7% because the 10-year Treasury yield, the number lenders use to price 30-year loans, climbed to its highest level since 2007. The Fed's September hike played a smaller role than most buyers assume.

The Federal Reserve raised its benchmark rate on September 16, so a lot of buyers we talk to connect the two. The Fed hike matters, but it sits a step away from your mortgage. The number that moves your rate is the 10-year Treasury yield.

Does the Fed Control Mortgage Rates?

No. The Fed sets the federal funds rate, a short-term rate banks charge each other overnight. Lenders price 30-year mortgages off the 10-year Treasury yield, which investors set by buying and selling bonds.

On September 16, the Fed raised the federal funds rate by a quarter point, to a range of 3.75% to 4.00%. That was its first increase since 2023.

The federal funds rate moves credit card rates, HELOCs and savings accounts within weeks. A 30-year mortgage runs on a much longer clock, and lenders price it off the bond market.

Check the dates. Going into the meeting, traders gave the hike 92% odds, so bond investors had already priced it in. Treasury yields dipped the day the Fed announced it, and the big jump in yields came a week later.

One more clue: this week, CME FedWatch shows traders now expect the Fed to hold steady in October, with about 66% odds. Expectations for a near-term hike fell, and the 10-year yield kept rising. Something besides the Fed is pushing it.

How Do Treasury Bonds Affect Mortgage Rates?

Mortgage rates move with the 10-year Treasury yield. Investors who buy home loans could buy Treasuries instead, so they want a little extra for taking on mortgages, which keeps mortgage rates above the 10-year yield.

Bonds, Explained Like a Credit Score

A Treasury bond is an IOU from the U.S. government. When Washington needs to borrow, it sells bonds to investors, and the yield is the interest rate it pays them.

Investors size up the government the way a lender sizes you up. Uncle Sam's credit score is still near the top. All three major rating agencies grade U.S. debt one notch below their highest rating, after Moody's became the last to downgrade it in 2025, and the government still borrows at some of the lowest rates available. Investors still get nervous. If they expect inflation to shrink their returns, or they watch the government borrow more each year, they ask for a higher rate. You've seen the same thing if your credit score dipped or your debt-to-income ratio rose.

Your mortgage sits one rung down that ladder. That's why mortgage rates sit above the 10-year Treasury yield, and why the two move together.

How High Has the 10-Year Treasury Yield Climbed?

The 10-year Treasury yield reached 5.29% on September 30, its highest level since 2007, up from 4.94% on September 17, the day after the Fed's decision. Over the same two weeks, Freddie Mac's 30-year average climbed from 6.95% to 7.03%, then to 7.28%.

Mortgage rates don't track the 10-year point for point. Lenders add a cushion on top, called the spread, and that cushion grows when investors get picky about buying mortgage bonds. The two still move in the same direction, and right now both are heading up.

Investors expect more Fed hikes

Most Fed officials projected at least one more hike before year-end. On September 23, Fed Governor Michael Barr said further policy adjustments would be needed to bring inflation down, and bond investors sold. October odds have since shifted toward a hold, but traders still lean toward a December hike. The Fed's signals moved yields more than the hike itself.

The economy keeps running hot

A September survey of purchasing managers hit its highest level in more than four years. A strong economy brings more demand for loans and more risk of inflation, and both push yields higher.

Oil and the Middle East

Brent crude, the global oil benchmark, has traded above $100 a barrel for much of September, more than 70% higher than where it started the year. It settled at $104.32 on September 25 after Reuters reported that U.S. and Iranian negotiators were exploring a phased deal to reopen the Strait of Hormuz. Bond investors hate inflation because it shrinks what their fixed payments can buy. Consumers feel it too: a University of Michigan survey found Americans expect 4.6% inflation over the next year, up from 4% in August.

More bonds than buyers want

The federal government keeps borrowing, and companies building AI data centers are borrowing billions too. At a $70 billion Treasury auction of 5-year notes on September 23, investors showed weak demand and required a 5.03% yield, the highest for that note since 2006. More supply chasing the same pool of buyers raises the price of borrowing.

Do Big Spending Promises Move Mortgage Rates?

They can, whoever makes them. Large new spending means more government borrowing, and stimulus can add to inflation. Each pushes yields up, and your mortgage rate follows.

In early 2021, President Biden pushed the $1.9 trillion American Rescue Plan through Congress, including $1,400 checks to most Americans. The 10-year yield started that year at 0.91% and topped 1.6% the day after he signed the bill in March. Mortgage rates rose about half a percentage point over the same stretch. The vaccine rollout and reopening optimism played a part as well.

This September, President Trump promised a $5,000 payment to every adult citizen if Republicans keep both the House and the Senate. Analysts put the cost at $1.2 trillion or more. Congress would have to approve it, so for now it remains a campaign promise. Bond investors watch both kinds of plans for the same reason.

What Do Rising Mortgage Rates Mean for Colorado Springs Buyers and Sellers?

Over the past year, higher rates have cost a typical El Paso County buyer about $45,000 in purchasing power, while home prices have barely moved. In response, sellers are giving more ground, through below-list offers, seller concessions and assumable loans.

How Common Are Seller Concessions in El Paso County?

Two out of three September sales in El Paso County included a seller concession. As The Johnson Team works with buyers across the county, we see sellers more willing to consider below-list offers and requests for concessions.

A concession is money the seller contributes toward the buyer's costs. Buyers can use it to buy down their interest rate, either for the first two years with a 2-1 buydown or for the life of the loan. Across El Paso County, 67% of September sales included a seller concession, up from 62% a year earlier. The median credit, when sellers paid one, was $10,000, or 2.2% of the sale price.

Can You Assume a VA Loan in Colorado Springs?

Yes, with the lender's approval. Many FHA and VA loans let a qualified buyer take over the seller's existing loan, low rate included.

Savvy buyers are hunting for these assumable mortgages. You'll need cash, or in some cases a second loan, to cover the gap between the price and the remaining balance. That gap grows each year as owners pay down their loans and prices rise, and the supply of low-rate loans shrinks as owners sell or refinance.

Our agents have helped buyers close VA assumptions, and two recent cases show how they work. Tyrone Moore's buyer purchased a $420,000 home, took over a VA loan with about $375,000 left at 2.75%, and covered the gap of about $45,000 with cash. When that buyer would have locked a new loan in mid-August, the average 30-year VA rate was about 6.10%. On the same balance, the assumption saves about $500 a month in principal and interest, and in the first year, about $1,000 less each month goes to interest. That deal closed in 30 days. Michelle Getz's buyer assumed a 2.5% VA loan with about $65,000 down, and that assumption took 65 days. Plan for a longer timeline than a standard purchase, and ask your lender early whether the seller's loan qualifies. Our buyer's guide walks through how financing fits into the rest of the purchase.

Is Colorado Springs a Buyer's or Seller's Market?

It's a balanced market, or close to it. El Paso County has about 4.8 months of supply, and by the common six-month rule of thumb, sellers still hold a slight edge.

We have about 3,800 homes for sale in the county right now, about 4.8 months of supply at the current sales pace. Many of our sellers say it feels like a buyer's market anyway, especially compared with the decade-long seller's market that cooled after rates jumped in 2022.

How Much Have Monthly Payments Gone Up?

On a median-priced El Paso County home with 20% down, principal and interest rose from $2,303 a year ago to $2,512 at 7.28%, even though the price fell.

Payments show principal and interest only. Property taxes add about $150 a month on a typical home here, and homeowners insurance adds about $250.

What Should Colorado Springs Buyers Do When Rates Rise?

Negotiate, because flat prices and below-list sales give you room. A buyer who budgeted $2,303 a month a year ago could afford a $465,000 home with 20% down. At 7.28%, that same payment buys about $420,000.

You still have room to work. Prices have held flat, and about half of local homes sell below list price, so you can negotiate. Ask the seller to cover a rate buydown. A 2-1 buydown on a median-priced home costs about $8,900 on a conventional loan and lowers your payment for the first two years. Get quotes from more than one lender; Freddie Mac estimates shoppers save $600 to $1,200 a year. If you're a veteran or on active duty, ask about VA pricing, which runs around 7% today.

"Have rates gone up? Yes. Is buying a home less affordable? Yes. But today's slower market also means more negotiating power, more seller incentives, and creative financing strategies that can lower your payment, cover closing costs, or even help pay off other debt. Don't count yourself out based on rates alone. The home you thought was out of reach might be more attainable than you think."
Christine Angely, Senior Loan Officer, V.I.P. Mortgage, Inc., NMLS 1703874

Should Colorado Springs Sellers Offer a Buydown or a Price Cut?

For most buyers, a buydown credit does more. A credit toward the buyer's rate lowers their monthly payment more in the first two years than the same dollars off the price.

Homes here sold in a median 35 days in September, a few days faster than a year ago. Buyers signed most of those contracts in August, before rates crossed 7%. October and November buyers will shop with smaller budgets, so price your home for today's payment math. Our seller's guide covers pricing strategy in more depth.

Christine Angely, a Senior Loan Officer with V.I.P. Mortgage (NMLS 1703874), ran the numbers for us on a median-priced $459,000 home. On a conventional loan at 7.5% with 1 point (about 7.67% APR) and 20% down, a 2-1 buydown costs about $8,900. On a VA loan at 7% with half a point (about 7.29% APR) and 0% down, it takes about $11,000, because the loan is larger.

Source: Loan scenarios prepared for The Johnson Team by Christine Angely, Senior Loan Officer, V.I.P. Mortgage, Inc. (NMLS 1703874; company NMLS 145502), October 1, 2026. Figures are illustrative and based on a $459,000 purchase price.

Add about $425 a month to each payment for taxes and insurance, using Christine's conservative estimates of $175 and $250.

The buydown saves the most up front. A price cut or a paid funding fee keeps saving for the life of the loan, so buyers who plan to keep the loan for decades may come out ahead that way, while buyers who expect to refinance if rates fall get more from the buydown. Any concession money the buydown doesn't use can go toward closing costs, escrows or prepaids. If escrow is new to you, our no-BS guide to escrow explains how it works.

For VA buyers, Christine points out a less obvious move. Using concessions to pay the 2.15% funding fee, instead of rolling it into the loan, gives almost the same payment as a price cut, but the buyer starts out owing about $10,000 less. For active-duty buyers who may PCS in a few years, that equity cushion matters. Depending on VA guidelines, seller concessions can also go toward certain buyer debts, like a car loan or credit cards, which can free up monthly cash flow.

These figures are illustrative estimates, not a loan offer, rate quote or commitment to lend. Your rate, costs and payment depend on your credit, loan program and lender pricing. Payments show principal and interest only and exclude taxes, insurance and mortgage insurance. Talk with a licensed lender for numbers specific to you.

What If You Locked a Rate Under 4%?

Your mortgage is worth more to you today than it was a month ago. If you locked in under 4% in 2020 or 2021, let us run the numbers on your next payment with a lender before you list.

Local figures: El Paso County residential sales from MLS data via Repliers. September 2026 totals may change as late sales post.

What Could Move Mortgage Rates Next?

Watch the jobs data, the Fed's October meeting, oil and the Iran talks, and Treasury auctions. Each one can push the 10-year yield, and your rate, in either direction.

The September jobs report showed slower hiring. The Bureau of Labor Statistics released it on Friday, October 2, and employers added 29,000 jobs while unemployment edged up to 4.2%. The October jobs report comes out Friday, November 6.

The Fed's October 28 meeting. Traders expect a hold, but Fed officials' comments afterward will move bonds more than the decision.

Oil and the Iran talks. A deal to reopen the Strait of Hormuz would ease inflation fears. A breakdown would do the opposite.

Treasury auctions. Weak demand at the next few auctions would signal more upward pressure on rates.

The Bottom Line

The next time you hear that rates moved, check the 10-year Treasury yield before you check the Fed. Bond investors set the tone for your mortgage, and right now they're worried about inflation, oil and a lot of new government borrowing.

If you're buying or selling in Colorado Springs this fall, reach out to The Johnson Team. We'll run your numbers with a lender and build a plan around the rate you'll pay this month. If you're still deciding where to look, our Colorado Springs neighborhood guides break down the areas buyers ask us about most.

This article is general information, not financial or lending advice. Talk with a licensed lender about your situation.

About The Johnson Team

The Johnson Team is a group of 20+ agents with Keller Williams in Colorado Springs, serving buyers and sellers across El Paso County. Founded in 2010, we've earned 2,700+ five-star reviews across Zillow, Google, Realtor.com, and Facebook, making us the most reviewed team in Colorado, and we're the #1 Keller Williams Colorado team by closed units. Meet the full team.

The Johnson Team, 25 N Spruce St., #200, Colorado Springs, CO 80905, (719) 417-4419

Frequently Asked Questions

What are mortgage rates in Colorado Springs right now?

As of October 1, 2026, Freddie Mac's average 30-year fixed rate was 7.28%, with daily trackers near 7.4%. VA pricing ran around 7%.

Does the Fed set mortgage rates?

No. The Federal Reserve sets the federal funds rate, a short-term rate banks charge each other overnight. Lenders price 30-year mortgages off the 10-year Treasury yield, which investors set by buying and selling bonds.

Why are mortgage rates going up right now?

The 10-year Treasury yield hit its highest level since 2007 in late September 2026. Investors expect more Fed hikes, the economy is running hot, oil prices are high, and the government and large companies keep adding to the supply of bonds.

What is the median home price in El Paso County?

The median sold price for residential homes in El Paso County was $459,000 in September 2026, compared with $465,000 in September 2025.

Is Colorado Springs a buyer's or seller's market?

As of early October 2026, El Paso County had about 3,800 homes for sale, roughly 4.8 months of supply. That's balanced or close to it, with sellers holding a slight edge by the six-month rule of thumb.

How common are seller concessions in El Paso County?

In September 2026, 67% of El Paso County sales included a seller concession, up from 62% a year earlier. The median credit, when sellers paid one, was $10,000, or 2.2% of the sale price.

 Can you assume a VA loan in Colorado Springs?

Yes. Many FHA and VA loans let a qualified buyer take over the seller's existing loan, low rate included, with the lender's approval. You'll need cash or, in some cases, a second loan to cover the gap between the price and the remaining balance. Recent local VA assumptions closed in 30 and 65 days.

Is a 2-1 buydown worth it?

A 2-1 buydown lowers your rate by 2 points in year one and 1 point in year two, which can make the first years of ownership more affordable. It works best when a seller pays for it. Ask your lender to compare it with a permanent rate buydown for your situation.

How much does a 2-1 buydown cost on a Colorado Springs home?

As of October 1, 2026, a 2-1 buydown on a $459,000 median-priced home cost about $8,900 on a conventional loan with 20% down and about $11,000 on a VA loan with 0% down, based on lender scenarios from V.I.P. Mortgage.