Geopolitical Tensions Drive U.S. and Canadian Mortgage Rates Higher

Mortgage rates in the United States and Canada have surged as geopolitical instability in the Middle East drives inflation expectations and Treasury yields. In the U.S., the average 30-year fixed-rate mortgage climbed to 6.58% on July 23, 2026, while the 15-year rate reached 5.96%. These increases follow a rise in the 10-year Treasury yield to 4.7%, triggered by escalating conflicts in Iran and Houthi rebel attacks in the Red Sea that pushed crude oil prices toward $100 per barrel.

Donald Trump contributed to market volatility by stating he is weighing a "massive attack" against Iran. These financial pressures, combined with record-high home prices, have slowed U.S. home sales to an annual pace of 4 million, well below the historic 5.2-million norm. Despite this, the Mortgage Bankers Association reported a 6% weekly increase in purchase applications due to improving inventory.

In Canada, housing affordability declined in 11 of the 13 largest markets. According to Rates.ca, rising five-year fixed-mortgage rates, which averaged 4.57% at major banks in June, offset the benefits of falling home prices in cities like Toronto and Vancouver. In the U.S., over 70% of recent buyers purchased homes expecting to refinance, but high yields have made those payments unsustainable for many, with 81,000 adjustable-rate mortgage holders facing resets in 2027.