The US housing market is dealing with a familiar problem wearing a new costume. Mortgage rates have climbed to their highest level in nearly a year, with the average 30-year fixed rate hitting 6.51% for the week ending May 21, 2026, according to Freddie Mac. That is up from 6.36% the prior week, and rates have continued hovering in the 6.5% to 6.65% range heading into early July.
The last time borrowing costs sat this high was August 2025.
Why rates are rising now
The short answer is oil, war, and the bond market’s reaction to both. The US-Israeli conflict with Iran, which began on February 28, 2026, has introduced a serious supply risk to global energy markets. The Strait of Hormuz, the narrow waterway responsible for roughly 20% of global oil transportation, sits squarely in the conflict zone.
When that chokepoint looks threatened, energy prices rise. When energy prices rise, inflation expectations rise. When inflation expectations rise, the bond market demands higher yields to compensate, and mortgage rates, which are closely tied to the 10-year Treasury yield, follow.
