The rate on the most popular US home loan rose last week to its highest in more than two years and pierced the 7% level for the first time since the first week of President Donald Trump’s term, after the Federal Reserve lifted short-term interest rates to combat inflation, and rising oil prices drove up Treasury yields that underpin residential borrowing costs.

The average 30-year fixed-rate mortgage jumped 15 basis points to 7.12% in the week ended September 18, the Mortgage Bankers Association said on Wednesday. It was last higher in May 2024.

The 30-year mortgage rate was last above 7% in late January 2025, days into Trump’s second term. Its surge over the course of this year has become one of the focal points of the affordability problem dogging the White House and Republicans more broadly with midterm elections that will determine the control of Congress just six weeks away.

Trump’s job approval ratings are at record lows, and a Reuters/Ipsos poll published Monday showed just 17% of respondents approve of the president’s handling of the cost of living, the top issue Americans say will influence how they vote in November.

Mortgage rates have risen more than a full percentage point since joint US-Israeli strikes against Iran began pushing up the global price of oil in late February, putting the squeeze on prospective homebuyers and a chill into the US housing market.

Mortgage rates track US Treasury yields, which are sensitive to oil prices and the threat of inflation they pose. Inflation has been running above the Fed’s 2% goal for 5-1/2 years.

Last week the Fed increased its policy rate by a quarter of a percentage point to the 3.75%-4.00% range to put inflation on a “timelier” path to 2%, and nearly all Fed policymakers projected at least one more rate increase by the end of this year. Traders are also betting on further Fed rate hikes.

The projections released alongside the rate decision also showed policymakers now don’t see inflation fully returning to their 2% target until 2029, a year later than projected three months earlier.

The rise in mortgage rates last week led to a decline in refinancing and home purchase applications, the MBA said, and drove more borrowers into adjustable-rate mortgages, which offer lower upfront borrowing costs than fixed-rate mortgages and reset after a number of years to whatever the going rate is at the time. ARMs accounted for 9.8% of mortgage applications last week, the MBA said.

The MBA’s index tracking overall mortgage application volumes slid to a 15-month low, led by a fourth weekly decline in refinancing applications to the lowest since February 2025.

The yield on 10-year US Treasury notes, a pricing benchmark for 30-year mortgages, has shot to the highest in nearly two decades, hovering around 5% and up from around 4% before the start of the war with Iran. The rise has been fueled by views that inflation may take longer to be brought back to the Fed’s 2% target than previously expected and, more recently, signs that US economic growth is accelerating and demand is strengthening across the economy.

(Reporting by Ann Saphir; Editing by Chris Reese and Andrea Ricci )