US mortgage rates have climbed to 7.49%, their highest level in nearly three years, increasing borrowing costs for homebuyers and pushing mortgage demand to its weakest level since February 2025, according to data from the Mortgage Bankers Association (MBA) cited by Reuters.
The average rate on a 30-year fixed-rate mortgage rose 19 basis points in the week ended October 2, the MBA said. The increase took rates to their highest level since November 2023, adding pressure to an already strained housing market as Americans approach the November 3 elections.
Mortgage applications fell 4.2% from the previous week, while refinancing applications also declined sharply. Overall mortgage application volumes have now dropped nearly 50% since January, according to the report.
“Very few homeowners have an incentive to refinance at these rates, and the jump in borrowing costs has caused many potential borrowers to step back from the purchase market,” Joel Kan, the MBA’s deputy chief economist, told Reuters.
Mortgage rates have closely tracked movements in the yield on 10-year US Treasury notes. The yield crossed 5.3% earlier this week, reaching a 24-year high, amid concerns about inflationary pressure from rising oil prices and data indicating stronger US economic growth.
The rise in mortgage costs has been particularly pronounced since late February. Home borrowing rates are up by about 1.4 percentage points since joint US-Israeli strikes against Iran began, according to the report, broadly following a similar increase in the 10-year Treasury yield.
The housing market faces the latest increase at a politically sensitive moment. Cost of living was the top issue for Americans in deciding how to vote, according to a Reuters/Ipsos poll completed on Monday. The report also said US President Donald Trump’s approval rating stood at a record low of 32%.
Inflation has risen to 3.4% in August on a measure targeted by the Federal Reserve, above the central bank’s 2% target. Federal Reserve policymakers have signalled that they expect another interest-rate increase by the end of the year following the rate hike in September.
Financial markets are currently betting that policymakers will not raise rates at the next meeting at the end of October. The latest mortgage-rate increase, however, has already reduced affordability for prospective buyers and weakened activity in the mortgage market.
The immediate housing-market indicators to watch are mortgage applications, refinancing demand, Treasury yields and the Federal Reserve’s next interest-rate decision.
