US Mortgage Rates Reach 6.51%, Highest in Nine Months Amid Iran Conflict

US mortgage rates have climbed to 6.51%, marking the highest level in nearly nine months. This increase is attributed to turmoil in the bond market, influenced by the ongoing conflict in Iran, which has disrupted oil markets and fueled inflation. The average 30-year fixed-rate mortgage rose from 6.36% the previous week to 6.51%, according to Freddie Mac. This marks the sharpest weekly increase since April 2025, when the bond market experienced similar stress following the announcement of sweeping tariff increases. Mortgage rates are closely tied to the US 10-year Treasury yield, which has risen sharply due to concerns that rising oil prices and the conflict in Iran could lead to persistently higher inflation. The Consumer Price Index data released last week indicated a 3.8% increase in prices in April, the highest level since May 2023. Before the outbreak of the Iran conflict, average mortgage rates had briefly dropped below 6% for the first time in over three years. Homebuyers who secured mortgages during that period could see significant savings compared to those locking in loans at current rates. For example, on a $450,000 home with a 20% down payment, monthly principal and interest payments would be approximately $2,154 at a 5.98% rate, compared to roughly $2,278 at the current rate, resulting in an additional $1,488 per year. Despite the recent increase, mortgage rates remain lower than the 6.86% average seen in mid-May of last year. However, the combination of higher borrowing rates and economic uncertainty stemming from the Middle East conflict is affecting the housing market. Mortgage applications for new home purchases decreased by 2.4% from a year ago, and by 10% compared to March 2026, according to the Mortgage Bankers Association. Existing home sales rose just 0.2% between March and April, following a 3.6% decline the previous month, as reported by the National Association of Realtors. National home prices have remained near record levels, with the median existing home sales price at $417,700 in April, marking the 34th consecutive month of year-over-year price increases. Brad Case, chief economist at Homes.com, noted two significant barriers to home ownership: high mortgage rates and uncertainty. He emphasized that making a significant financial decision like buying a house requires a firm foundation, which is currently lacking due to recent rate fluctuations.