By Ann Saphir
Oct 7 (Reuters) – The interest rate on the most common U.S. home loans jumped last week to its highest level in nearly three years, worsening affordability for buyers four weeks before elections that will decide whether President Donald Trump’s Republicans retain control of Congress.
The average 30-year fixed-rate mortgage rate jumped 19 basis points to 7.49% in the week ended Oct. 2, the Mortgage Bankers Association reported Wednesday. Its last increase dates back to November 2023.
Mortgage rates are closely tied to the yield on 10-year U.S. Treasuries, which hit a 24-year high earlier this week, driven “by concerns about inflationary pressures” from soaring oil prices and data showing stronger U.S. economic growth.
The cost of living is the top issue on Americans’ minds as they decide how they will vote on Nov. 3, a Reuters/Ipsos poll showed Monday, and it’s one reason Trump’s approval rating is at a record 32 percent.
Mortgage rates have risen about 1.4 percentage points since the start of joint U.S.-Israeli strikes against Iran in late February, tracking a similar rise in the 10-year Treasury yield, which topped 5.3% on Monday.
Inflation is also rising, recording 3.4% in August by a measure the Federal Reserve targets at 2%.
Fed policymakers have indicated they plan to follow up their September interest rate hike with another rate hike by the end of the year, although markets are betting for now that they won’t budge at their next policy meeting in late October.
Mortgage loan applications fell 4.2% last week compared to the previous week, the MBA said on Wednesday, with refinancing applications falling sharply. The overall volume of applications is the lowest since February 2025 and has fallen almost 50% since January.
“Very few homeowners have any incentive to refinance at these rates, and rising borrowing costs have pushed many potential borrowers out of the purchase market,” said Joel Kan, MBA deputy chief economist.
(Reporting by Ann Saphir; editing by Jamie Freed and Nick Zieminski)
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