Following the escalation of hostilities in the Iran war, oil prices have risen sharply, which in turn has driven bond yields higher. Consequently, the average rate on a 30-year fixed mortgage increased by 6 basis points to 6.87%, marking the highest rate since June 2025. This rise represents a total increase of 12 basis points since last Thursday and over 30 basis points in the past two months.
Matthew Graham, COO at Mortgage News Daily, noted that while rates are at their highest in over a year, the increase has been gradual rather than explosive, influenced by inflation expectations, high bond issuance, and economic resilience. The anticipated decline in rates this year has been disrupted by the conflict in Iran.
For context, the rate was 5.99% just before the conflict began in late February. For a typical $450,000 home purchase with a 20% down payment, the monthly mortgage payment has risen to $2,363, which is $207 more than it would have been at the end of February. Higher rates also mean fewer borrowers qualify for mortgages, as they affect debt-to-income ratios.
Additionally, home prices are rising again, with a 1.5% year-over-year increase reported in June, up from 1.2% in May, according to the S&P CoreLogic Case-Shiller index. Rebecca Kaufman from S&P Dow Jones Indices highlighted that high financing costs are causing current homeowners to hesitate in selling their homes, as they would lose the low mortgage rates they secured in previous years