Average rates for a 30-year fixed mortgage jumped to 6.75% on Tuesday, hitting their highest level since July 2025. The 7-basis-point increase marks a 0.75% rise since the start of the war with Iran in late February, representing the fastest rate spike since late 2024.
The cost of entry. For a buyer with a 20% down payment on a $420,000 median-priced home, the shift from 5.99% in early March to 6.75% today adds $167 to the monthly principal and interest payment. While rates remain below the 7% peaks seen a year ago, current volatility is tied directly to bond market anxiety over the trajectory of the war and its impact on gas prices.
Resilient housing demand
Despite the affordability squeeze, homebuyer activity has not yet stalled. Sales of pending homes rose in April on both a monthly and annual basis. Homebuilders are mitigating the impact by buying down mortgage rates to maintain order growth through the spring season.
- The average refinance rate for a 30-year fixed loan reached 6.58% according to Zillow data.
- Jumbo 30-year fixed loans are significantly higher, averaging 7.65%.
- FHA 30-year fixed loans currently average 6.34%.
Mortgage-specific bonds have performed better than Treasuries recently due to purchase demand from Fannie Mae and Freddie Mac. This demand has prevented mortgage rates from climbing as aggressively as 10-year Treasury yields, which hit a one-year high during Tuesday's trading session.
Analyst John Lovallo of UBS suggests rates could drop just as precipitously if the war reaches a resolution and oil prices pull back.
