WASHINGTON, D.C.: U.S. mortgage rates jumped sharply last week, with the most common home loan reaching its highest level in almost three years and borrowing applications falling as higher costs weighed on prospective buyers.

The average 30-year fixed-rate mortgage surged 19 basis points to 7.49% in the week ended October 2, the Mortgage Bankers Association said on Wednesday. It was last higher in November 2023.

The increase worsens affordability for homebuyers four weeks before elections that will determine whether President Donald Trump's Republicans retain control of Congress.

Mortgage rates are tied closely to the yield on U.S. 10-year Treasury notes, which earlier this week hit a 24-year high, driven by worries over 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 November 3, a Reuters/Ipsos poll completed on Monday showed, and is one reason why Trump's approval rating is at a record low of 32%.

Home borrowing rates have risen about 1.4 percentage points since joint U.S.-Israeli strikes against Iran began in late February, tracking a similar rise in the 10-year Treasury yield, which topped 5.3% on Monday.

Inflation is also on the rise, registering 3.4% in August by a measure that the Federal Reserve targets at 2%.

Fed policymakers have signaled they expect to follow their September interest-rate increase with another rate hike by year's end, though markets are for now betting they will not move at their upcoming policy meeting at the end of October.

Mortgage loan applications fell 4.2% last week from the previous week, the MBA said on Wednesday, with refinancing applications dropping sharply. Overall application volumes are the lowest since February 2025 and have fallen 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.