Mortgage rates rise to 7.28% ahead of midterms, complicating GOP economic message

Oct 5, 2026

U.S. mortgage rates have surged to 7.49%, their highest level since November 2023, compounding housing affordability issues just weeks before the November 2026 midterm elections. Driven by rising 10-year Treasury yields and inflation linked to the ongoing war with Iran, the spike has cooled buyer demand, forcing 21% of home sellers to cut prices. This economic strain has pushed President Donald Trump's approval rating to a record low of 32%, complicating the GOP's campaign message.

Surging mortgage rates

▪The average contract interest rate on a 30-year fixed mortgage rose 19 basis points to 7.49% in the week ended October 2, 2026, marking its highest level since November 2023.
▪Freddie Mac data reported the average 30-year fixed mortgage rate at 7.28% for the week ended October 2, 2026, representing a quarter-point weekly increase that was the largest in over four years.

Rising bond yields

▪The 10-year U.S. Treasury bond yield, which closely tracks the 30-year mortgage rate, crossed 5.3% on October 5, 2026, reaching its highest level in approximately 24 years.
▪Zonda chief economist Ali Wolf stated that investor concerns over government debt have led to a bond market sell-off and subsequent increases in yields.

Lawrence Yun on mortgage rates

▪National Association of Realtors chief economist Lawrence Yun stated that a rising federal budget deficit is absorbing private savings and reducing available capital for the mortgage market.
▪National Association of Realtors chief economist Lawrence Yun stated that lower oil prices or a job-cutting economic recession could cause mortgage rates to decline in the short term.

Declining mortgage demand

▪Mortgage Bankers Association deputy chief economist Joel Kan stated that rising borrowing costs have caused many potential borrowers to step back from the purchase market.
▪Mortgage loan applications fell 4.2% in the week ended October 2, 2026, from the previous week, driven by a sharp drop in refinancing applications.

Housing market price cuts

▪Denver, Colorado, led major U.S. cities with 30.9% of active housing listings experiencing a price cut, followed by Indianapolis, Indiana, at 29.9% and San Antonio, Texas, at 26.8%.
▪Approximately 21% of home sellers with active listings cut their asking prices during the four weeks leading up to September 20, 2026, the highest proportion for that period since at least 2022.

Mortgage rate trends

▪U.S. mortgage rates have risen by approximately 1.4 percentage points since joint U.S.-Israeli military strikes against Iran began in late February 2026.
▪The average 30-year fixed mortgage rate has remained above 5% since mid-August 2022.

Trump's midterm election campaign

▪President Donald Trump expressed concern to reporters and supporters in October 2026 regarding Republican electoral prospects in up to 40 midterm races, specifically highlighting Michigan and Texas.
▪President Donald Trump promised to implement a $5,000 'Trump dividend' for every adult American citizen, funded by tariff revenues, if Republicans retain control of both chambers of Congress in November 2026.

Public opinion on Trump's economic handling

▪National Economic Council director Kevin Hassett disputed negative economic polling on CNN, arguing that strong consumer spending figures suggested the pollsters were wrong about public sentiment.
▪An AP-NORC poll published in late September 2026 found that 26% of Americans approved of President Donald Trump's overall economic handling, while 17% approved of his handling of the cost of living.
▪A Reuters/Ipsos poll completed on October 5, 2026, showed that the cost of living is the top issue for American voters, with President Donald Trump's overall approval rating at a record low of 32%.

High fuel prices

▪The national average price of regular unleaded gasoline stood at $4.37 a gallon on October 5, 2026, up from $3.13 a year prior, while diesel stood at $6.32 a gallon.
▪President Donald Trump has repeatedly defended high fuel costs, telling supporters in August and October 2026 that paying more for gasoline is a small price to pay to prevent Iran from acquiring a nuclear weapon.

Debatable claims

▪The Trump administration bears the primary responsibility for current U.S. inflation
▪The current wave of home price cuts represents a healthy correction for the U.S. housing market
▪The United States economy is stronger than public sentiment suggests
▪The rising federal budget deficit is the primary driver of high U.S. mortgage rates