Rising Mortgage Rates Hit US and Canada Amid Geopolitical Tensions

Housing affordability has declined across North America as rising borrowing costs offset stabilizing or falling home prices. In Canada, Rates.ca reported that affordability dropped in 11 of the 13 largest markets in June, with average five-year fixed-mortgage rates at major banks rising to 4.57%.

In the United States, the average 30-year fixed-rate mortgage reached 6.58%, the highest level since August 2025, while 15-year rates climbed to 5.96%. These increases follow a rise in the 10-year Treasury yield to 4.7%. Economists attribute this volatility to inflation risks and surging crude oil prices, which exceeded $100 per barrel following Houthi rebel attacks in the Red Sea and escalating conflict with Iran.

Market instability has been further fueled by President Donald Trump, who stated he is weighing a "massive attack" against Iran. These financial pressures have contributed to sluggish U.S. home sales, which are currently pacing at 4 million annually, well below the historic norm of 5.2 million. While the Mortgage Bankers Association noted a 6% weekly increase in purchase applications due to better inventory, the National Association of Realtors reported that pending home sales saw their steepest monthly drop of 2026 in June.