The average 30-year fixed-rate mortgage rose to 6.66% this week, the Federal Home Loan Mortgage Corp. (Freddie Mac) reports — the highest level in a year. At the end of last July the average was 6.72%, and the recent uptick signals that homeownership is becoming less affordable for many buyers.
Rates had been sliding through late 2025 and into early 2026. In February the average 30-year rate dipped below 6%, raising hopes that a weaker housing market might revive as buyers returned and homeowners felt less incentive to stay put with low pandemic-era loans. Those hopes have been undercut in recent weeks.
A key driver has been geopolitical turmoil in the Middle East. The war with Iran and the temporary closure of the Strait of Hormuz pushed oil prices higher. Higher oil costs increase shipping and production expenses, contributing to broader price increases and higher inflation expectations. Those inflation pressures have lifted yields on the 10-year Treasury note — a benchmark that heavily influences mortgage rates — and mortgages have followed suit.
“Oil prices always swing mortgage rates,” said Kara Ng, senior economist at Zillow. “You get a real-time read every time you go to a gas pump about what it means to buy a home.”
AAA reported the national average price for a gallon of regular gasoline was about $4.10 on Thursday, roughly $1.11 higher than before the conflict began.
Investors have also been reacting to signals from the Federal Reserve. Although the central bank left its benchmark rate unchanged at its most recent meeting, three members of the rate-setting committee voted in favor of a hike. Markets interpreted that rare split as an indication that a rise in policy rates could come as soon as September, which tends to push longer-term yields and mortgage rates upward.
Kate Wood, a housing analyst at NerdWallet, noted that the intermittent pauses and resumptions in the fighting make it hard for markets to feel confident. “The best bet would be a decisive, conclusive, actually-sticks end to fighting in Iran,” she said. Even with an end to the conflict, Wood added, investors might remain cautious: “Markets might be a little bit once bitten, twice shy.”
High home prices are compounding the effect of rising rates. The National Association of Realtors reports that transactions have barely moved over the past three years; in June the median existing-home sale price exceeded $440,000, while sales declined about 2.4% from a year earlier. That combination — higher borrowing costs and elevated asking prices — has kept many potential buyers sidelined and contributed to a sluggish market.
In short, a mix of geopolitical risk, rising energy costs, stronger Treasury yields and the prospect of higher Fed policy rates has pushed mortgage rates to their highest level in a year, tightening affordability for would-be homebuyers.