Mortgage Rates Jump to 6.95% as Midterms Near, Making Ownership an Even Tougher Reach

What just happened to borrowing costs

Mortgage rates are climbing again. Freddie Mac said Thursday the average 30-year rate rose to 6.95% - the loftiest level dating back to January 2025, the month President Donald Trump returned to office. The announcement came immediately following a Federal Reserve rate hike, the first in three years, dimming hopes for a swift decline in borrowing costs. With the 10-year Treasury yield hovering around a 2007-era peak, mortgage pricing has marched higher.

The strain is bleeding into the broader market. Builder confidence has slid to match the weakest since late 2022, weighed down by softer mortgage application volumes, elevated material prices, and immigration enforcement that has pushed workers away. And resales have not turned the corner either, with existing-home sales extending a downturn into a fifth year.

Affordability is cracking, and it is hitting swing-state cities

Sticker shock is showing up in the math. According to the National Association of Realtors, 49% of the US metros it monitors now demand household earnings of at least $100,000 to qualify to buy a median-priced home with 10% down. In 2019, that was just 6%.

The list spans battleground areas like Columbus, Ohio; Dallas-Fort Worth-Arlington, Texas; and Lancaster, Pennsylvania. For context, the US real median household income in 2025 was $87,460.

"The housing sector is not a good-news story from any dimension," Douglas Holtz-Eakin, who leads the right-leaning American Action Forum, said. "We had a period of low inventory on both the owner-occupied and rental side, and now we have the problem of high prices and high financing costs."

Main Street is feeling it. "Whenever one of our staff members is looking for housing, it can be very tough to find something," said Andrew Volk, owner of the Hunt & Alpine bar in Portland, Maine. Asked if that has made it harder for employers to keep workers, he answered, "One thousand percent."

Politics, polls, and the midterm clock

Roughly six weeks out from the Nov. 3 midterms, housing costs are shaping the mood. Trump pledged on day one back in office to make homes more affordable, and "Making Housing Affordable Again" appears as the top accomplishment at his Department of Housing and Urban Development. But the lack of relief is improving Democrats' chances of taking the House and possibly the Senate.

Household sentiment is sliding again. Preliminary University of Michigan data show confidence worsened in September, approaching a record low. Among Republicans, 35% say the administration is handling the economy well, the lowest reading dating back to when Trump returned to the White House.

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"I think Republicans should be quite cognizant of this," said Holtz-Eakin, a former director of the Congressional Budget Office. "The unemployment rate is 4.1%, but people are going to work and not getting ahead. That's not a happy feeling."

On the stump, affordability dominates. "Democrats are talking about affordability, and now Republicans are trying to talk about it, even though Trump calls it a hoax," said Bernie Porn, a veteran pollster based in Michigan, a state hosting one of the nation's most closely watched Senate contests. In Maine, where Democrats are eyeing a Republican-held Senate seat, the big-ticket issues are "affordability - then a gap - and then Trump," said Mark Brewer, who leads the political science department at the University of Maine. "Data centers are moving up fast. Everything else comes after."

Policy swings, market moves, and what it means for your money

Capitol Hill delivered a bipartisan housing bill this summer, but a planned celebration fizzled when Trump canceled a Capitol signing event at the last moment while insisting a voter ID measure pass first. The legislation became law without his signature, removing a stage-managed victory for Republicans.

A separate attempt to pull down rates also backfired. Under Trump's direction, Fannie Mae and Freddie Mac rolled out a plan to buy $200 billion of mortgage-backed securities to tamp borrowing costs, only for rates to climb following the administration's launch of a war with Iran, which heightened inflation worries. Fuel prices jumped and have been pinching consumers for months, despite the president repeatedly saying the conflict would be over in weeks.

Fresh ideas are circulating. Last month, White House officials proposed raising the capital gains tax exclusion for purchases of primary homes, a change that would require Congress and would tilt toward higher earners. Trump also promoted sending $5,000 dividend checks to Americans, but only if Republicans keep control of both chambers in November.

There are no easy choices here. "For some people it might be a better outcome if you had prices really falling like we had in the financial crisis," said Chen Zhao, who heads economics research at Redfin. "But that's really terrible for the 56% of Americans who already own their homes. So there are different constituents we have to think about here." And the issue is top of mind with voters: housing affordability ranked first for those aged 18 to 34 and second for those 35 to 49 in a July CNBC survey.

The day-to-day impact is personal. That includes people like Yousef El-Raghy, a 28-year-old in Jersey City, who said housing costs are feeding populist sentiment, especially among younger Americans. "I did everything right - I went to a good school, I didn't take on a ton of debt, I saved money," he said. "I worked on Wall Street, I moved into tech, and I still can't afford a home," he added. "What more could I have done?"

If you are watching your own budget, the key drivers are in plain sight: mortgage rates tied to the 10-year Treasury, builder sentiment that signals future supply, and policy headlines that can swing both costs and confidence. Those forces are deciding whether homeownership feels doable in your city or stays out of reach.

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