The average rate on a 30-year fixed mortgage in the United States rose to 6.52% this week, creeping close to its highest level of the year as borrowing costs remain elevated due to the ongoing war with Iran. Mortgage buyer Freddie Mac reported Thursday that the benchmark rate ticked up from 6.48% the previous week, approaching the 6.53% peak set just two weeks ago on August 28. Despite the increase, rates remain below where they stood a year ago at 6.84%.

The 15-year fixed-rate mortgage, popular among homeowners refinancing existing loans, also climbed this week to 5.84% from 5.79%. A year ago, that rate sat at 5.97%, according to Freddie Mac. When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, shrinking their purchasing power. The 10-year Treasury yield, which lenders use as a guide for pricing home loans, stood at 4.53% in midday trading Thursday, up from 4.47% a week earlier and significantly higher than the 3.97% level it held in late February before the war broke out.

The report attributes the upward pressure on rates directly to the conflict between the U.S. and Iran that began in late February, which has disrupted crude oil flow from the Persian Gulf to customers worldwide. That disruption sent oil prices sharply higher, helping drive up inflation. Expectations of higher oil prices as the war drags on have kept long-term bond yields elevated, causing mortgage rates to mostly trend higher. As recently as late February, the average 30-year mortgage rate had slipped just under 6% for the first time since late 2022, but it hasn't fallen below that threshold since the conflict started.

The elevated rates and uncertainty about how much higher they might go has kept many would-be homebuyers on the sideline. Sales of previously occupied homes declined in the first three months of 2026 compared to a year earlier, extending a nationwide housing slump dating back to 2022. Sales of existing U.S. homes continue hovering close to a 4-million annual pace, far short of the historic norm closer to 5.2 million. However, mortgage applications data offer a glimmer of hope: applications jumped 10.8% last week after declining in recent weeks, with both home purchase and refinancing loans rebounding, according to the Mortgage Bankers Association.

Still, the outlook remains clouded by persistent economic pressures. Jiayi Xu, an economist at Realtor.com, warned that "if inflation continues to outpace wage growth, eroding purchasing power alongside still-elevated mortgage rates, household budgets will come under increasing pressure," posing a meaningful drag on housing demand heading into summer. The spring homebuying season proved lackluster, and whether the recent uptick in applications signals genuine momentum or just a temporary bounce remains to be seen as the housing market heads into the second half of the year with borrowing costs stubbornly high and geopolitical uncertainty weighing on the economy.