Mortgage rates had started to ease last week. The temporary truce sparked optimism that reduced international conflicts might lower borrowing expenses. However, the renewed conflict now threatens to reverse that positive outlook.
Rates snapped back up to 6.49%. The rate rose from 6.43% a week earlier, as of July 9, 2026.
Since it started in late February 2026, the conflict with Iran has been the main cause of these rate swings. Higher oil prices from the conflict have stoked inflation fears, making the Federal Reserve less likely to cut rates. As a result, borrowing costs remain high, squeezing homebuyers who were hoping for relief.
The recent volatility underscores the sensitivity of mortgage rates to geopolitical shocks. When tensions rise, oil prices often climb, feeding into broader inflation concerns. The Federal Reserve, which closely monitors inflation, may be less inclined to cut interest rates if energy costs remain elevated.
This dynamic keeps borrowing costs elevated for homebuyers, compounding the affordability challenges that have persisted since the pandemic. Since the Iran conflict erupted in late February 2026, mortgage rates have seesawed, remaining far above the historic lows of 2021. The Fed's ongoing battle against inflation - partly fueled by higher oil prices - has kept financing expensive, pushing homeownership further out of reach for many Americans.
Since hitting historic lows near 3% in 2021, mortgage rates have more than doubled, severely eroding homebuyer purchasing power and making monthly payments far higher. This persistent affordability squeeze, compounded by the ongoing conflict in Iran, continues to suppress home sales.
Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter
The persistent rise in borrowing costs has dramatically changed what typical buyers can afford. For a median‑priced home, monthly payments have climbed by hundreds of dollars compared to 2021, forcing many to either postpone a purchase or settle for lower‑priced properties. Combined with limited inventory, this financial strain has kept the housing market in a prolonged slump, with no rapid recovery in sight.
The recent pattern mirrors the roller‑coaster ride seen since the conflict began. Mortgage rates initially jumped above 6.6% in March, then drifted near 6.4% before the latest upheaval. The brief ceasefire last week had offered a glimmer of stability, but the renewed fighting has dashed those hopes, leaving homebuyers in a familiar state of uncertainty.
One year ago the rate was 6.72%. The immediate trigger was Trump canceling the ceasefire, which stoked fears that renewed fighting could push oil prices higher and keep borrowing costs elevated.
High mortgage rates are already holding buyers back.
Joel Berner, senior economist at Realtor.com, said, "Stubbornly high mortgage rates are a big part of what's holding buyers back from making 2026 a major improvement over the past few years of home sales, and the current situation in Iran may keep them higher for longer." The conflict with Iran has disrupted the housing sector. Sales of previously owned U.S. homes fell 2.4% in June 2026, according to the National Association of Realtors.
Zillow forecasts mortgage rates around 6.3% by the end of 2026.
Senior economist Kara Ng of Zillow Home Loans said: "Zillow's forecast still points to a drift, not a drop."
Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets