The average rate on a 30-year fixed mortgage has surged to 6.87%, marking the highest level since June 2025. This increase of 12 basis points since Thursday is largely driven by rising oil prices, which have been affected by renewed hostilities in the Iran war.

As bond yields rise due to the conflict, mortgage rates are following suit. This latest spike in rates represents a significant increase of over 30 basis points in the past two months alone. Matthew Graham, the chief operating officer at Mortgage News Daily, noted that while rates are at their highest in over a year, the increase has been a gradual process rather than a sudden surge. Factors such as inflation expectations, elevated bond issuance, and economic resilience have all contributed to this trend.

Prior to the onset of the conflict in February, the average rate for a 30-year fixed mortgage was 5.99%. For homebuyers looking at a median-priced home of $450,000, the monthly principal and interest payment would now be approximately $2,363, which is $207 more than it would have been at the end of February.

This rise in mortgage rates poses challenges for potential homebuyers, as higher rates can affect their ability to qualify for mortgages due to shifting debt-to-income ratios. Additionally, home prices are also on the rise, with the latest S&P CoreLogic Case-Shiller home price index indicating a 1.5% year-over-year increase in June, up from 1.2% in May.

As financing costs remain elevated, current homeowners are hesitant to sell and give up the low mortgage rates they secured in previous years, further constraining the housing market.