The 30-year fixed rate jumped as fresh US-Iran hostilities pushed Treasury yields higher
The average 30-year fixed-rate mortgage climbed to 6.55% for the week ending July 16, the highest level in nearly a year, as a fresh escalation in the US-Iran conflict rattled bond markets and erased what had been a cautiously improving affordability picture for American homebuyers.
The reading, released Thursday by Freddie Mac through its Primary Mortgage Market Survey (PMMS), marks a six-basis-point increase from 6.49% the prior week and is the steepest 30-year average since August 28, 2025, when rates sat at 6.56%.
The 15-year fixed-rate mortgage also rose, climbing to 5.93% from 5.82%. A year ago, the 30-year averaged 6.75% and the 15-year sat at 5.92%.
"Purchase application demand has weakened recently, but housing affordability is more favorable and housing inventory continues to rise, thus the backdrop for prospective homebuyers is modestly improving," Sam Khater, chief economist at Freddie Mac in McLean, Virginia.
Geopolitics override an encouraging inflation signal
An otherwise promising week for rate watchers was quickly overtaken by events in the Middle East. The Consumer Price Index showed headline inflation cooling to 3.5% and core inflation easing to 2.6%, according to the Bureau of Labor Statistics, a reading that briefly raised hopes for a pullback in borrowing costs.
Those hopes did not survive the week. American and Iranian forces continued exchanging airstrikes over control of the Strait of Hormuz, driving crude oil prices and Treasury yields sharply higher.
The 10-year Treasury yield — which lenders use as a primary benchmark when pricing fixed-rate home loans — stood at 4.57% at midday Thursday. That's up from 4.54% the prior week and well above the 3.97% level recorded in late February before the conflict began.
A market driven by oil, not the Fed
For brokers advising clients in this environment, the dominant rate driver is not Federal Reserve policy — it is oil. Industry veterans have been consistent on this point throughout the year.
Melissa Cohn, regional vice president at William Raveis Mortgage in New York, previously said that the Fed's communication shift under Chair Kevin Warsh has not moved the needle.
"Right now, mortgage rates are going to move with oil prices, and oil prices are increasing, so rates will rise as well," Cohn said.
"Until there is a better resolution with Iran, we are stuck in a higher-for-longer rate environment."
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
