WASHINGTON, Oct 8 (Reuters) - The average rate on the popular US 30-year fixed-rate mortgage surged to a near three-year high this week, and could increase further as concerns over inflation boost Treasury yields.
The 30-year fixed mortgage rate averaged 7.40%, the highest level since November 2023, mortgage finance agency Freddie Mac said on Thursday. That was up from 7.28% last week.
The US-Israeli war with Iran is fanning inflation through higher energy prices, driving up longer-term Treasury yields. The yield on the benchmark 10-year Treasury note, which mortgage rates track, has risen to a 24-year high.
The average rate on a 30-year fixed-rate mortgage has soared 142 basis points since the war started at the end of February.
Rising mortgage rates and still-high home prices have put the housing market at the center of what economists call an affordability crisis heading into the November 3 midterm elections, which will determine control of Congress.
President Donald Trump earlier this year refused to sign a bipartisan housing affordability bill, calling it "a big yawn" as he pressed Congress, including fellow Republicans resisting his demands, to first pass separate and contentious voting requirements.
The bill, which among other main provisions, waives or speeds up environmental reviews for home construction projects and places a cap on the number of already constructed single-family homes that big Wall Street investors can own, became law without Trump's signature in July.
Higher mortgage rates are not only suppressing demand, but they have also left potential sellers reluctant to put their houses on the market. Most homeowners have mortgage contracts below 5%. That has contributed to a national housing shortage, especially of starter homes, keeping prices elevated even as demand has weakened.
"Higher rates are holding back both demand and supply this fall, so it is unlikely that there will be significant downward pressure on home prices," said Lisa Sturtevant at Bright MLS. "We should expect a housing market 'stall' and not a housing market 'crash' this fall."
Reporting By Lucia Mutikani; Editing by Mark Porter and Nia Williams
