US mortgage rates have climbed to 7.49%, their highest level since November 2023, putting further pressure on homebuyers and pushing mortgage demand to its weakest point since February 2025, according to data from the Mortgage Bankers Association cited by Reuters.
The average rate for a 30-year fixed-rate mortgage rose by 19 basis points in the week ended October 2. Mortgage applications fell 4.2% from the previous week, while refinancing applications also dropped sharply. Overall application volumes have declined by nearly 50% since January.
The rise has reduced the incentive for existing homeowners to refinance and has forced potential buyers to reconsider purchases as monthly borrowing costs increase. Joel Kan, the MBA’s deputy chief economist, said very few homeowners had an incentive to refinance at current rates and that higher borrowing costs had caused many potential borrowers to step back from the purchase market.
Mortgage rates in the United States have closely tracked movements in the yield on 10-year US Treasury notes. The 10-year yield crossed 5.3% earlier this week, reaching a 24-year high, amid concerns about inflation linked to higher oil prices and data indicating stronger US economic growth.
The latest increase has added about 1.4 percentage points to home borrowing rates since joint US-Israeli strikes against Iran began in late February, according to the report. The movement has broadly followed a similar rise in the 10-year Treasury yield, which is an important reference point for long-term borrowing costs.
The housing market is facing the rate increase at a politically sensitive moment, with the US mid-term elections four weeks away. Cost of living was the top issue for Americans in deciding how to vote, according to a Reuters/Ipsos poll completed on Monday. US President Donald Trump’s approval rating was reported at 32%.
Inflation has also risen to 3.4% in August on a measure targeted by the Federal Reserve, compared with the central bank’s 2% goal. Fed policymakers have indicated that they expect another interest-rate increase before the end of the year after raising rates in September.
Markets were betting that policymakers would not raise rates at the next meeting at the end of October, according to the report. That expectation has not yet translated into lower mortgage costs, as housing finance rates continue to respond to Treasury yields, inflation concerns and broader economic conditions.
For households, the immediate effect is a squeeze on affordability: buyers face higher financing costs, while homeowners with existing loans have less reason to refinance. The fall in applications also points to weaker activity across the mortgage market as borrowers delay or abandon decisions to purchase or restructure home loans.
The Mortgage Bankers Association’s next set of application data will indicate whether demand continues to weaken after the latest rate increase, while upcoming Federal Reserve decisions and movements in the 10-year Treasury yield remain the key reported factors affecting borrowing costs.
