U.S. Mortgage Rates Fall After Trump-Iran Peace Deal

Average 30-year fixed-rate mortgages in the United States fell to 6.47%, down from 6.52% the previous week, while the 15-year fixed rate decreased to 5.81%. This decline followed a drop in the 10-year Treasury yield to 4.44%, which lenders use to price home loans.

The shift in borrowing costs was triggered by a June 17 agreement signed by Donald Trump and Iran to end a conflict that began in late February. The deal established a ceasefire, reopened the Strait of Hormuz for oil shipments, and set limits on enriched uranium stockpiles, creating a 60-day window to negotiate a permanent settlement. This eased market concerns regarding inflation and oil price spikes caused by war disruptions.

Simultaneously, the Federal Reserve System held benchmark interest rates steady in the 3.5% to 3.75% range during its first meeting under new Chair Kevin Warsh. Despite the dip in mortgage rates, the housing market remains strained, with existing home sales hovering around 4 million annually, well below the historical norm of 5.2 million. Some Federal Reserve policymakers indicated that benchmark rates may need to remain higher or potentially increase later this year to bring inflation back to the 2% target.