It only seemed like a matter of time and that time is apparently now.
The 30-year fixed reached a fresh 52-week high today, rising to 6.85% from 6.77% yesterday.
That’s the highest rate since last July and another blow to prospective home buyers struggling with affordability woes.
And it could get even worse before it gets better, with tensions in the Middle East causing oil prices to spike while stoking inflation.
If it continues, we might be talking about a return to 7-handle mortgage rates next.
Mortgage Rates Now the Highest They’ve Been Since June 2025
The year started off great for mortgage rates, with the popular 30-year fixed dipping below 6% for the first time since mid-2022.
But things took a turn for the worse at the end of February when the U.S. launched strikes against Iran.
That led to a huge spike in energy prices and was exacerbated when Iran effectively closed the Strait of Hormuz.
Mortgage rates saw some relief in April and again in June on hopes of some sort of peace deal, but we now appear far away from any real accord.
The latest escalations include attacks on Saudi oil tankers in the Red Sea, led by the Houthi rebels.
That not only widens the scale of the war to more countries and regions, but also means two key waterways for moving oil and natural gas are at risk of being shut off.
Now Brent crude futures are back above $100 per barrel and the threat of another wave of inflation is higher than ever.
Bonds don’t like inflation since it erodes the value of the dollar. Similarly, MBS-investors demand higher yields if inflation is expected to worsen in the near future.
As such, mortgage rates are under a lot of upward pressure, and now sit just one eighth of a percent below the dreaded 7% threshold.
Are 7% Mortgage Rates Just a Matter of Time?
We knew new 52-week highs were a matter of time for mortgage rates. How about a 7% mortgage rate?
Since the conflict got underway, I’ve argued that we could see 7% mortgage rates, though each time we got close, things seemed to cool off.
This latest increase might be different though because bond yields are surging higher and the Fed might even be forced to hike to lower the temperature.
At last glance, the 10-year bond yield was right around 4.70%, which is also a new 52-week high.
It was just below 4% when the conflict broke out at the end of February, then quickly moved higher to price in the risk of $100 oil.
Now with two key waterways seeing daily fighting, things could get even worse.
It wouldn’t take a whole lot to get above 7%, with the 30-year fixed currently priced at 6.85%, per Mortgage News Daily.
But it could depend somewhat on the Fed’s press conference next week, where new Chair Kevin Warsh will field questions.
There will also be an interest rate decision, which was an overwhelming hold until the last couple days, when odds of a hike surged to nearly 40%.
The bond market is already flashing red and if it thinks the Fed will begin hiking again, things could get ugly.
On the other hand, Warsh could come out and say the Middle East conflict is temporary, and that inflation is otherwise improving.
And in order to balance the Fed’s dual mandate, which includes maximum employment, they could just stand pat for now. At least for the July meeting.
Still, any more escalation might be enough to push bond yields even higher and take the 30-year fixed with it.
Whether it gets to 7% or higher remains to be seen, but we sure are getting close!
(photo: Eli Duke)
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 20 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
