What happened to mortgage rates this week?
The Freddie Mac 30-year mortgage rate increased 5 basis points to 6.71% this week, following the rise in the 10-year Treasury yield. Mortgage rates have been climbing since the start of the US-Iran conflict in late February and hit a new high for 2026. The Middle East conflict has put upward pressure on oil prices, fueling inflation and pushing it further from the Fed’s 2% target. When the conflict appeared to be nearing resolution, bond yields declined and mortgage rates followed suit. But the latest escalation in Middle East tensions has driven oil prices higher, reviving inflation concerns and pushing yields and mortgage rates back up.
In his Jackson Hole speech last Friday, Fed Chairman Kevin Warsh doubled down on the view that inflation has run too high for too long, and that the policy rate remains the Fed’s primary tool to bring it back down. Notably, Warsh acknowledged that the Fed must act to tame the inflation, while doubling down that he would not commit to anything. So the question is no longer whether there will be a rate hike, but when it will happen. After Warsh’s talk, nearly 57% of traders were betting on a rate hike at the September FOMC meeting.
Â
Â
What does this mean for the housing market?
We don’t expect any real mortgage rate relief this fall. But if inflation isn’t tamed, the pain will be real. Higher inflation would simultaneously erode paychecks and real income growth while keeping mortgage rates elevated for longer. That’s a squeeze on housing from both sides: what people can afford, and what they’re willing to buy into.
Still, there’s some good news for people planning to buy this year: home prices continue to decline, and the share of listings with price cuts is at its highest level this year, a sign that good deals are out there. Meanwhile, sellers aren’t retreating either. The delisting share is much lower than what we saw last year, while active listings remain higher than year-ago levels.
