The average rate on a 30-year US mortgage has risen to 7.49 percent, its highest level in nearly three years. Mortgage applications have fallen by almost half since the start of the year, with less than a month to go before the midterm elections.

Mortgage rates in the United States have reached their highest level in nearly three years, Al Jazeera reported on Wednesday, October 7.

The average rate for a 30-year fixed-rate mortgage rose 19 basis points to 7.49 percent in the week ending October 2, according to the weekly report of the Mortgage Bankers Association.

Buyers Are Stepping Back

Applications for mortgages fell 4.2 percent from the previous week.

They are now at their lowest level since February 2025, and have fallen by almost half since the beginning of the year.

“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,” said Joel Kan, deputy chief economist at the Mortgage Bankers Association.

What Is Driving Rates Up

Mortgage rates closely follow the yield on 10-year US Treasury notes. Earlier in the week that yield reached a 24-year high of 5.3 percent, as oil prices surged amid continuing tensions with Iran.

The yield on 30-year Treasury bonds rose to 5.7 percent on Wednesday, its highest level since 2002.

Mortgage rates have been climbing since late February, when the United States and Israel first struck Iran. Inflation, running at 3.4 percent over the past year, is adding to the pressure.

A Political Problem

The rise comes less than a month before congressional midterm elections that could decide the balance of power in Washington.

In a Reuters/Ipsos poll in late August, 47 percent of voters said the cost of living was the single most important issue ahead of the midterms.

In a separate Reuters/Ipsos poll in September, 17 percent of voters said they approved of President Donald Trump’s handling of cost-of-living issues.

What a Basis Point Is

A basis point is one hundredth of a percentage point. A rise of 19 basis points therefore means the average rate went up by 0.19 percentage points in a single week, from 7.30 percent to 7.49 percent.

Image: A new house for sale in New Orleans, September 2023 (file photo). Photo by Infrogmation of New Orleans via Wikimedia Commons, CC BY-SA 4.0.