U.S. Mortgage Rates Hit One-Year High Amid Iran Conflict

The average 30-year fixed-rate mortgage in the United States rose to 6.55%, the highest level since August 2025. According to Freddie Mac, this increase from 6.49% the previous week was driven by rising 10-year Treasury yields and oil price volatility resulting from renewed strikes in Iran. Average 15-year fixed-rate mortgages also climbed to 5.93%.

This surge in borrowing costs contributed to a tepid housing market. The National Association of Realtors reported that pending home sales fell 5.4% in June, a sharper decline than economists forecasted. Mortgage applications also declined, with reports ranging from a 2.7% to 7% drop. Lawrence Yun of the National Association of Realtors noted that record-high median home prices, nearly $441,000, combined with these rates, have made the market especially difficult for first-time buyers.

While the Bureau of Labor Statistics reported that annual inflation dropped to 3.5% in June, reignited conflict in the Middle East pushed gas prices back up to $3.94 a gallon. In response to affordability issues, a bipartisan housing law aimed at increasing supply and limiting private equity purchases of single-family homes became law. Donald Trump, President of the United States, opposed the legislation, arguing that it was of minor importance compared to the impact of interest rates.