Surging mortgage rates above 7% are stifling the U.S. housing market, with existing-home sales dropping to their lowest point since mid-2025 as inflationary pressures and geopolitical instability keep borrowing costs elevated.
Oil prices rose amid intensifying Iran conflict, contributing to inflationary pressure and higher Treasury yields.
Zillow cited as source for mortgage rate data; higher rates may pressure housing market and platform activity.
LoanDepot economist commented on Fed rate impact; mortgage originator faces headwinds from elevated rates.
Average 30-year mortgage rates climbed to 7.14% last week, reaching their highest level of the year as geopolitical tensions in Iran drive up oil prices and Treasury yields. This surge in borrowing costs has pushed existing-home sales to their slowest pace since June 2025, creating a challenging environment for prospective buyers and limiting market inventory.
Mortgage rates track 10-year Treasury yields, which are currently rising due to investor concerns over stubborn inflation and geopolitical instability in Iran, rather than solely reacting to the Fed's immediate rate decisions.
High rates discourage current homeowners from selling, as they are often locked into lower rates, while simultaneously increasing loan denial rates by pushing borrowers above acceptable debt-to-income thresholds.