Mortgage Rates Rise for 5th Straight Week, Hitting Levels Not Seen Since 2025
The average long-term U.S. mortgage rate rose for a fifth consecutive week to its highest level in just over a year, marking the latest strain for prospective homebuyers facing steep borrowing costs. The benchmark 30-year fixed-rate mortgage climbed to 6.69%, mortgage buyer Freddie Mac said Thursday, up slightly from 6.66% reported last week. By comparison, the average rate was 6.63% at this time last year — and hadn’t been higher than its current level since late July 2025.
Why Rates Keep Climbing
Mortgage rates are influenced by several factors, including inflation, Federal Reserve policy decisions, and bond market investor expectations. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Rates have been mostly rising this year as the U.S. war with Iran has fueled expectations for hotter inflation, with crude oil prices soaring after Tehran blocked the Strait of Hormuz in late March. Despite easing oil prices recently, long-term bond yields remain steeper than they were before the conflict began in late February, pushing mortgage rates to tread higher.
The 10-year Treasury yield was 4.65% as of midday Thursday on the bond market. Before the war, it was just 3.97% in late February.
“The upward move comes despite a choppy week in the bond market: The 10-year Treasury yield hit an 18-month high above 4.7% in late July before pulling back several basis points this week on hopes that the U.S. and Iran are nearing a deal to reopen the Strait of Hormuz,” said Danielle Hale, Realtor.com’s chief economist, as reported by Fox Business.
Housing Market Feels the Squeeze
Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing power. As rates rise, that can lead prospective home shoppers to delay buying a home — one reason U.S. home sales have been sluggish this year.
Seasonally adjusted sales of previously occupied U.S. homes were up just 0.7% from January to June compared with the same period last year, hovering close to a 4-million annual pace far short of the historic norm of about 5.2 million. The trend has extended the national housing market slump that began in 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes were essentially flat last year, stuck at a 30-year low.
The latest data on mortgage applications show that the upward trend in rates has given some would-be homebuyers reason to pause. Mortgage applications, which include loans to buy a home or refinance an existing mortgage, fell 6.4% last week from the previous week, according to the Mortgage Bankers Association.
“While incoming economic data will continue to shape the outlook for interest rates, elevated borrowing costs remain a challenge this summer for many prospective homebuyers,” said MBA CEO Bob Broeksmit.
Geopolitics at the Center
The sustained rise in mortgage rates is inextricably linked to the broader geopolitical landscape. The 2026 Iran war has been the primary driver of higher energy prices and inflation expectations, which in turn have pushed up long-term bond yields.
However, there are tentative signs of relief on the horizon. Treasury Secretary Scott Bessent said on August 4 that a deal to reopen the Strait of Hormuz could be reached “today or tomorrow,” and oil prices fell below $80 per barrel on hopes of an agreement, according to Al Jazeera’s live coverage.
“There is some tentative good news: preliminary reports show some progress on geopolitical fronts, which has tempered the rise in daily mortgage rates,” said Kara Ng, senior economist at Zillow, as reported by Yahoo Finance. “Still, the backdrop remains complicated.”
Fed Policy Adds Pressure
The Federal Reserve left its key interest rate unchanged at its late July meeting as it wrestles with how to tame stubbornly high inflation, which has been stuck above the central bank’s 2% target for more than five years. Three regional Fed bank presidents dissented in favor of higher rates to combat high prices.
That’s a signal that Fed members are no longer in lockstep on inflation and that their next move is not going to be a rate cut, said Anthony Smith, senior economist at Realtor.com, in an AP News report from last week.
“With the Fed signaling that its next move is more likely a hike than a cut, near-term rate relief looks unlikely,” Smith said. “Because oil remains the primary channel through which the Iran conflict feeds inflation, a de-escalation and a reopening of the Strait of Hormuz remains the clearest path back toward lower rates.”
What to Watch Next
Despite the headwinds, there are some signs of market adjustment. “While mortgage rates continue to influence affordability, the housing market is showing signs of adjustment, with listing prices modestly below year-ago levels and for-sale inventory improving from the limited supply seen in recent years,” said Sam Khater, Freddie Mac’s chief economist.
Meanwhile, the 15-year fixed-rate mortgage fell slightly to 6.01%, down from 6.04% last week. A year ago, it was at 5.75%.
Hale noted that the path forward for mortgage rates will depend on several key data points. “Mortgage rates have been slow to follow that pullback, and Friday’s jobs report, next week’s inflation report and how the Hormuz talks resolve, will determine whether that gap closes in the coming weeks,” she said.
For now, prospective homebuyers face a challenging environment. “Recent mortgage rate volatility makes it a challenging time for homebuyers to navigate the market, especially as this volatility is coming at the upper end of the mortgage rate range we’ve seen over the last year,” Hale added.
As the U.S. and Iran continue negotiations over the Strait of Hormuz, and as the Federal Reserve weighs its next policy move, the direction of mortgage rates — and the health of the housing market — hangs in the balance. The coming weeks’ economic data and diplomatic developments will be critical in determining whether rates finally ease or continue their upward march.