The average rate on a 30-year fixed-rate mortgage in the United States rose 19 basis points to 7.49% in the week ended October 2, according to the Weekly Mortgage Applications Survey released October 7 by the Mortgage Bankers Association (MBA). It is the highest level since November 2023 — a fresh three-year high that comes just over a week after Zagdim reported mortgage rates crossing 7.30% on October 3.
The increase raises monthly payments for prospective homebuyers and reduces the incentive for existing homeowners to refinance. Overall mortgage loan applications fell 4.2% week-on-week, the MBA said, with refinancing activity dropping sharply; application volumes are now at their lowest level since February 2025 and down nearly 50% since January. “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, the MBA’s deputy chief economist.
Mortgage rates track the yield on 10-year US Treasury notes, which topped 5.3% this week — its highest level in about 24 years. The move reflects concerns that inflation will stay elevated: US inflation, measured by the Federal Reserve’s preferred gauge, stood at 3.4% in August, well above the Fed’s 2% target, while oil prices have risen amid supply concerns linked to the Iran conflict. Home borrowing costs are up about 1.4 percentage points since late February, tracking a similar rise in the 10-year Treasury yield.
Fed policymakers have signaled they expect to follow their September rate increase with another hike before the end of the year, though financial markets are currently pricing in no move at the Fed’s policy meeting later this month. US Treasury Secretary Scott Bessent said the rise in mortgage rates reflects a temporary shock from higher oil prices, adding that rates should ease once energy markets are better supplied and the conflict eases.
References
Mortgage Bankers Association – Mortgage Applications Decrease in Latest MBA Weekly Survey / Reuters – US 30-Year Mortgage Rate Hits Highest in Nearly Three Years
