rates

Rising borrowing costs have pushed mortgage applications to lowest level since February 2025.

Mortgage rates in the United States have hit their highest level in nearly three years, as cost-of-living concerns weigh on Americans less than a month before the midterm elections.

The average cost for a 30-year fixed-rate mortgage jumped 19 basis points to 7.49 percent for the week ending October 2 , according to the Mortgage Bankers Association’s weekly report released on Wednesday.

Meanwhile, applications for mortgages tumbled 4.2 percent from the previous week, according to the report. Applications are 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,” Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, said in a press release.

Mortgage rates are closely tied to US 10-year Treasury notes. Earlier this week, those hit a 24-year high of 5.3 percent amid surging oil prices tied to ongoing tensions with Iran.

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

Mortgage rates have jumped since late February, when the US and Israel first struck Iran. Since the strikes, mortgage rates have climbed 1.4 percent. Inflation, which has risen by 3.4 percent from a year ago, is also putting pressure on mortgage rates.

It comes as the cost of living is top of mind for voters as they approach the congressional midterm elections that could decide the balance of power in Washington, DC. According to a Reuters/Ipsos poll in late August, 47 percent of voters said that 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 US President Donald Trump’s handling of cost of living-related issues.

Reserve Bank of Australia lifts benchmark rate to 4.6 percent amid stubborn inflation.

Australia’s central bank has raised interest rates to a 15-year high, spelling higher mortgage payments for millions of Australian households.

The Reserve Bank of Australia (RBA) on Tuesday lifted the benchmark rate by 0.25 percent to 4.6 percent, its highest since 2011.

The RBA said inflation remained elevated and that previously flagged “upside risks” had materialised, including higher energy prices due to the United States-Israel war on Iran and rising tech costs.

“There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation,” the bank’s monetary board said in a statement.

“The Middle East conflict remains unresolved, and there are scenarios where inflation is higher and activity lower than forecast,” it said.

“Global oil supply disruptions are maintaining upward pressure on global and domestic energy prices and inflation. A period of prolonged uncertainty may also cause growth to be lower overseas and in Australia.”

Australia’s annual rate of inflation stood at 3.5 percent in July, well above the central bank’s 2–3 percent target.

Central banks typically raise their benchmark interest rate when policymakers believe prices are rising too fast.

Higher interest rates raise the cost of borrowing, including mortgages, cooling consumer demand and bringing down inflation.

The latest hike is set to heap further strain on Australian households already grappling with three previous increases this year.

In a research report earlier this month, Roy Morgan said nearly one-third of Australian mortgage holders, or nearly 1.8 million people, were at risk of “mortgage stress” – where households spend 25-45 percent of after-tax income on payments – as of July.

Australia’s Treasurer Jim Chalmers, who is not responsible for setting interest rates, acknowledged that the hike would mean greater hardship for many Australians.

“We know a lot of Australians are under pressure and this will make things harder,” Chalmers said in a post on X.

“Inflation and interest rates are going up around the world but we know that doesn’t take the sting out of today’s decision.”

Chalmers said the government would take responsibility for “our part of the fight against inflation”.

“That means continuing to manage the budget responsibly, rolling out tax cuts and cost of living help, and addressing the longer term challenges in our economy in an uncertain global environment,” he said.