What happened to mortgage rates this week?
The Freddie Mac 30-year fixed mortgage rate rose to 6.69% this week, up 3 basis points from last week’s 6.66% and a new high for 2026. That also marks the first time in more than 44 weeks that mortgage rates have come in higher than a year earlier, when the 30-year averaged 6.63%. The upward move comes despite a choppy week in the bond market: the 10-year Treasury yield hit an 18-month high above 4.7% in late July before pulling back several basis points this week on hopes that the U.S. and Iran are nearing a deal to reopen the Strait of Hormuz. Mortgage rates have been slow to follow that pullback, and Friday’s jobs report, next week’s inflation report, and how the Hormuz talks resolve, will determine whether that gap closes in the coming weeks. Recent mortgage rate volatility makes it a challenging time for homebuyers to navigate the market, especially as this volatility is coming at the upper end of the mortgage rate range we’ve seen over the last year. The best way to navigate the fluctuations is to rate-test your budget, so you know how small changes in mortgage rates will affect your total monthly housing payment. Also, stay close with your lender to take advantage of potential dips in mortgage rates that are likely to occur if talks with Iran yield progress.
The bond market’s recent volatility traces back to a Federal Reserve that has been harder to read amid a macro context without a clear policy prescription. At its July meeting, the FOMC held rates steady in a 9-3 vote, but three regional presidents dissented in favor of a hike. The same three members dissented at April’s meeting too, though that time they agreed with holding rates steady and instead objected to the statement’s “easing bias” language signaling cuts were more likely than hikes. Chair Kevin Warsh has continued to withhold forward guidance, leaving markets to parse incremental data for clues on the Fed’s next move. That’s part of why this week’s Hormuz headlines moved yields as much as they did. With the Fed offering few signals of its own, any news that touches on inflation outlook, including energy prices tied to the Strait of Hormuz, carries outsized weight right now.
What does this mean for the housing market?
On the housing side, even as mortgage rates sit above year-ago levels for the first time in 44 weeks, the Realtor.com July housing report found median list prices down 2.4% year over year, a ninth straight month of declines. Sellers are still pricing more conservatively from the outset, though price cuts, still just below last year’s pace, are converging toward it. That convergence is sharpest in the Northeast and Midwest, the same regions Realtor.com coverage of Community Development Block Grants flagged as where new incentives tied to the 21st Century ROAD to Housing Act could matter most, since that’s where the housing shortage is most acute. Those incentives could end up helping younger buyers most directly: homeownership among those 35 and under fell to 35.2% in Q2, down from 36.4% a year earlier.
