Mortgage rates surge to the highest since June 2025

Key Points:

• Renewed hostilities in the Iran war have caused a spike in oil prices, leading to higher bond yields and increased mortgage rates, with the average 30-year fixed loan rate rising to 6.87%, the highest since June 2025.
• Mortgage rates have climbed over 30 basis points in the last two months, reversing earlier expectations of falling rates this year due to inflation expectations, bond issuance, and economic resilience.
• For a typical $450,000 home with 20% down, monthly principal and interest payments have increased by $207 since February, making it harder for many borrowers to qualify for mortgages due to higher debt-to-income ratios.
• Rising mortgage rates coincide with accelerating home price increases, with national prices up 1.5% year-over-year in June, driven by limited housing supply.
• High financing costs are causing current homeowners to hold onto their low-rate mortgages, further constraining housing market inventory.