The average rate for a 30-year fixed-rate mortgage in the U.S. spiked to 7.49% last week, marking the highest level in nearly three years. According to the Mortgage Bankers Association, this increase of 19 basis points came as the U.S. gears up for crucial midterm elections on November 3. The surge in mortgage rates is closely linked to the rising yield on 10-year U.S. Treasury notes, which hit a 24-year high due to concerns over inflation and strong economic growth.
The cost of living remains the top concern for American voters, with President Donald Trump’s approval rating at a record low of 32%. Since the joint U.S.-Israeli strikes against Iran began in late February, mortgage rates have risen by about 1.4 percentage points, mirroring the increase in the 10-year Treasury yield. Inflation also climbed to 3.4% in August, surpassing the Federal Reserve’s target of 2%.
Despite signals from Fed policymakers that another interest rate hike is likely by year’s end, markets currently expect no change at the upcoming October meeting. The spike in borrowing costs has led to a 4.2% drop in mortgage loan applications last week, with refinancing applications plummeting. Overall application volumes are the lowest since February 2025, down nearly 50% since January.
Joel Kan, the MBA’s deputy chief economist, noted that few homeowners see an incentive to refinance at current rates, and the rising borrowing costs have deterred many potential buyers from entering the market.