US mortgage rates hit highest level since start of war with Iran

The average 30-year fixed U.S. mortgage rate has risen to 6.55% as of July 16, 2026, marking its highest level in nearly a year. This increase, reported by Freddie Mac, follows a period where rates had briefly dipped below 6% earlier in 2026. This recent climb has dampened optimism for homebuyers and has been linked to ongoing geopolitical tensions.

The primary factor driving these elevated mortgage rates is a renewed conflict involving the U.S. and Israel with Iran, which began in late February 2026. This conflict has fueled concerns over global energy markets and supply chains, particularly impacting oil prices due to disruptions in the Strait of Hormuz. Rising oil prices, in turn, contribute to increased inflation expectations, prompting the bond market to demand higher yields, to which mortgage rates are closely tied.

Economists suggest that while inflation data has shown some cooling, the persistent geopolitical risks continue to exert upward pressure on borrowing costs. This has led to a noticeable decline in mortgage applications and pending home sales, indicating that higher rates are impacting homebuyer activity and affordability across the nation.