US Mortgage Rates Hit 7% Amid Iran War, Inflation

The US housing market is facing increased pressure as mortgage rates approach 7%, adding to affordability concerns for buyers. The average rate on a 30-year fixed mortgage stood at 6.76% last week, but daily rates have since crossed 7%. According to Freddie Mac, this rise in rates could further discourage buyers who have already been holding back from the market.

Michael Fratantoni, chief economist at the Mortgage Bankers Association, said that a jump in rates like this will certainly cause prospective home buyers to pause. They may not go ahead and put in that contract or apply for the loan.

The 30-year mortgage rate generally tracks the 10-year US Treasury yield, which briefly crossed 5% on Monday for the first time since late 2023. Rates have risen amid the Iran war, persistent inflation concerns, and growing US deficits, adding to a housing market already struggling with weak sales.

The Federal Reserve is expected to raise its benchmark rate Wednesday for the first time in three years, which could push mortgage rates lower if it reassures markets on inflation, or higher if investors see inflation risks worsening.