Housing News

Mortgage Interest Rates Tick Up as U.S.-Iran Conflict Escalates

Mortgage interest rates rose this week as renewed fighting between the U.S. and Iran pushed oil prices and long-term borrowing costs higher.

The average rate on a 30-year, fixed-rate mortgage increased to 6.49% for the week ending July 9, according to Freddie Mac. That was up from 6.43% a week earlier but remained below the 6.72% average recorded at this time last year.

“Interest rates picked up this week as the gradual breakdown of the ceasefire with Iran has stoked fears of further inflation and geopolitical instability,” wrote Realtor.com senior economist Joel Berner in “The primary mechanism by which the war in Iran has contributed to inflation, and thereby higher interest rates, is through the price of oil, which has jumped this week.”

Even with this week’s increase, mortgage rates have moved within a relatively narrow range recently. That gives homebuyers some consistency as they plan their purchases.

“Mortgage rates have not changed much recently, but economic growth and housing affordability continue to improve for homebuyers as they shop for homes in today’s market,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

Lower rates compared with a year ago continue to offer some relief to homebuyers. Someone purchasing a $400,000 home with 20% down would pay about $49 less per month at this week’s average mortgage rate than they would have a year ago.

Over 12 months, that amounts to about $583 in savings, or roughly $17,500 over the life of a 30-year, fixed-rate loan.

Mortgage applications dipped during the holiday-shortened week, although home purchase applications continued to run ahead of last year’s pace.

Applications to purchase a home declined 1% from the previous week after adjusting for the Fourth of July holiday, according to the Mortgage Bankers Association (MBA). On an unadjusted basis, applications were 5% higher than the same week a year ago.

Meanwhile, applications to refinance an existing mortgage fell 4% from the previous week. But they remained 8% higher than a year earlier, according to MBA.