The average U.S. 30-year fixed mortgage rate climbed 19 basis points to 7.49% for the week ending October 2, reaching its highest level since November 2023, according to the Mortgage Bankers Association.

The increase comes as yields on 10-year Treasury notes have climbed to their highest levels in more than two decades. Higher oil prices, persistent inflation concerns and stronger economic growth have contributed to the rise in long-term Treasury yields, which closely influence mortgage rates.

Mortgage rates have risen roughly 1.4 percentage points since U.S.-Israeli military strikes against Iran began in February, tracking a similar increase in the 10-year Treasury yield.

The higher rates are already weighing on demand. Mortgage applications fell 4.2% last week, while refinance applications dropped 8%. Purchase applications declined 2% and were 15% below the same week last year.

“Very few homeowners have an incentive to refinance at these rates,” MBA Deputy Chief Economist Joel Kan said, adding that higher borrowing costs have pushed potential buyers to step back from the market.

Inflation also remains above the Federal Reserve’s 2% target, while investors continue to assess whether the central bank will raise interest rates again before the end of the year.

The housing squeeze comes just weeks before the November 3 elections, when voters will decide control of Congress. The cost of living remains a major issue for voters, putting renewed attention on the broader economic pressures facing American households.