US mortgage rates rise to 6.43% as Iran conflict keeps bond yields elevated

US mortgage rates hit 6.43 per cent for a 30-year fixed loan as of May 7, extending a climb that began in March. The Iran conflict and sticky inflation have kept 10-year Treasury yields elevated, and mortgage rates follow the 10-year.

The Mortgage Research Center had the 30-year at 6.43 per cent, up 3 basis points from the prior week. Freddie Mac’s survey came in at 6.37 per cent for the week ending May 7. Realtor.com reported the same 6.37 per cent average. The 15-year fixed averaged 5.75 per cent across all three surveys.

Rates have risen roughly 40 basis points from the early-2026 lows near 6 per cent, when falling inflation and the Federal Reserve’s three late-2025 rate cuts pulled Treasury yields down. That rally didn’t last.

What’s driving the rise

The Iran conflict that started in February is the main engine. Crude oil spiked above $126 a barrel in April before pulling back. The energy pass-through kept headline inflation above the Fed’s comfort zone through the first quarter. Ten-year Treasury yields, the benchmark mortgage rates track most closely, climbed alongside. Mortgage rates followed.

“Mortgage rates follow the 10-year Treasury, not the Fed funds rate,” Bankrate’s analysts noted. The Fed cut 75 basis points across September, October, and December 2025. Short-term rates fell. The long end of the curve went the other way once geopolitical risk repriced.

The spread between the 30-year mortgage and the 10-year Treasury sits at roughly 210 basis points, well above the historical norm of 170 to 180. Lenders are pricing in uncertainty.

The housing market impact

Higher borrowing costs are hitting an affordability picture that was already grim. The median US home price rose 4.2 per cent year over year to $419,300 in the first quarter. Higher prices plus higher rates pushed the typical monthly payment on a new mortgage above $2,200 for the first time since late 2024.

Purchase applications fell 2.1 per cent week over week in the Mortgage Bankers Association’s latest survey. Refinancing activity, already at multi-decade lows, slipped further. The MBA’s refinance index is down 67 per cent from the same period in 2024.

What happens next

The rate outlook turns on geopolitics. US-Iran negotiations have started to pull oil prices back from the April peak. A ceasefire or peace deal would take the inflation premium out of long-dated bonds. Several analysts have pencilled in a 25 to 50 basis point drop in mortgage rates within 60 days of a durable peace deal.

Without one, the 30-year fixed rate probably holds between 6.25 and 6.75 per cent through midyear. The Fed is not expected to resume cutting until inflation data shows a clear deceleration. The June FOMC meeting is priced as a near-certain hold in the fed funds futures market.

For homebuyers, the arithmetic is punishing. A $350,000 mortgage at 6.43 per cent costs $2,196 in principal and interest per month. That is $87 more than the same loan at the January rate of 6.0 per cent. Across 30 years, the gap compounds to more than $31,000 in extra interest.