Mortgage rates climb to highest in nearly a year as Iran conflict fuels inflation fears

Mortgage rates in the United States have climbed to their highest level in nearly a year, with the average on a 30-year fixed-rate mortgage reaching 6.55% (according to Freddie Mac) or 6.65% (per the Mortgage Bankers Association), driven by renewed conflict with Iran that has pushed up oil prices and inflation expectations.

Rate hike details

The rise follows a brief drop below 6% in February. CNN and Infobae report the Freddie Mac rate at 6.55% Source: CNN, while La Republica Co cites MBA data showing 6.65% Source: La Republica Co. The 10-year Treasury yield, a key benchmark, increased to 4.57% from 3.97% before the conflict Source: Infobae.

Impact on the housing market

The higher rates are cooling an already strained market:

• Pending home sales fell 5.4% in June month-over-month, according to the National Association of Realtors Source: CNN.
• Mortgage purchase applications dropped 7.3% in the week ending July 10 Source: La Republica Co.
• "The higher mortgage rates and record-high home prices are contributing to a weak housing market," said Lawrence Yun, NAR chief economist Source: CNN.

Federal Reserve Chair Kevin Warsh noted the housing market is a weak spot, citing inflation above target Source: La Republica Co.