Mortgage Rates Rise to 6.49% Despite Iran Deal as Buyers Face a ‘New Normal’

Mortgage rates for 30-year fixed home loans increased to 6.49% for the week ending June 25, a 2 basis point rise from the previous week's 6.47%, according to Freddie Mac. This marks the sixth consecutive week rates have hovered near 6.5%, indicating stability at elevated levels. Despite a recent U.S.-Iran peace agreement and a subsequent 4% drop in crude oil prices on Wednesday, which sent 10-year Treasury yields down to 4.406%, mortgage rates did not decline. Freddie Mac's chief economist, Sam Khater, stated that rates have been relatively stable for the past six weeks, with purchase activity easing modestly and refinance activity increasing. Mortgage rates are influenced by bond market expectations of future inflation. The conflict in Iran contributed to bond market uncertainty and consumer price pressure, causing mortgage rates to climb over 50 basis points from multiyear lows of 5.98%. However, data suggests that buyers of existing homes may be adapting to this higher rate environment. In May, both pending and existing home sales showed modest improvements, and seller listing prices have decreased year over year for seven consecutive months.