US 30-Year Mortgage Rate Breaches 7% to Hit Two-Year High

The average rate on America's most popular home loan has climbed above 7% for the first time in more than two years, as a recent Federal Reserve rate increase and rising oil prices pushed up the Treasury yields that drive residential borrowing costs.

The 30-year fixed-rate mortgage averaged 7.12% in the week ended September 18, the Mortgage Bankers Association (MBA) said on Wednesday, a jump of 15 basis points and the highest reading since May 2024. The rate was last above 7% in late January 2025, shortly after President Donald Trump began his second term.

The increase has sharpened the affordability concerns weighing on the White House and Republicans with midterm elections that will decide control of Congress only six weeks away. Trump's job approval ratings stand at record lows, and a poll published Monday showed just 17% of respondents approved of his handling of the cost of living — the issue Americans say will most influence their vote in November.

Mortgage rates have risen by more than a full percentage point since joint US-Israeli strikes against Iran began lifting global oil prices in late February, squeezing prospective buyers and cooling the housing market. Mortgage rates tend to track US Treasury yields, which are sensitive to oil prices and the inflation they can stoke. Inflation has run above the Fed's 2% target for five and a half years.

Last week the Fed raised its policy rate by a quarter of a percentage point to the 3.75%–4.00% range, aiming to bring inflation back to 2% on a "timelier" path. Nearly all policymakers projected at least one more increase by the end of the year, and traders are betting on further hikes. Projections released with the decision showed officials do not expect inflation to return fully to target until 2029, a year later than they forecast three months earlier.

The higher rates have dampened demand. Refinancing and home purchase applications both fell, and more borrowers turned to adjustable-rate mortgages, which carry lower upfront costs but reset after a set period. ARMs accounted for 9.8% of applications last week, the MBA said. Its index of overall mortgage application volumes dropped to a 15-month low, led by a fourth straight weekly decline in refinancing to the weakest level since February 2025.

The yield on 10-year US Treasury notes, a benchmark for 30-year mortgages, has climbed to its highest in nearly two decades, hovering around 5% from roughly 4% before the war with Iran. The rise reflects expectations that inflation may take longer to tame and, more recently, signs that US economic growth and demand are strengthening.