Key facts
- The average 30-year fixed-rate mortgage reached 7.49% in the week ended October 2.
- This is the highest mortgage rate since November 2023.
- Mortgage rates are closely tied to the yield on US 10-year Treasury notes.
- US 10-year Treasury yields topped 5.3% on Monday.
- Mortgage loan applications decreased by 4.2% last week.
The interest rate on the most common U.S. home loan surged to 7.49% in the week ended October 2, marking its highest level in nearly three years, according to the Mortgage Bankers Association. This increase, a jump of 19 basis points from the previous week, reflects rising yields on U.S. 10-year Treasury notes, which have been driven by concerns over inflation from high oil prices and stronger economic growth data.
The elevated mortgage rates are impacting housing affordability for potential buyers. Joel Kan, the MBA’s deputy chief economist, noted that few homeowners have an incentive to refinance at these rates, and the higher borrowing costs are causing many potential buyers to withdraw from the market. Consequently, mortgage loan applications fell 4.2% last week, with a sharp drop in refinancing applications.
The cost of living is a significant issue for American voters ahead of the upcoming elections, with President Donald Trump's approval rating reportedly at a record low of 32%. Home borrowing rates have risen approximately 1.4 percentage points since late February, mirroring a similar increase in the 10-year Treasury yield, which exceeded 5.3% on Monday. Inflation registered 3.4% in August, above the Federal Reserve's 2% target.