Five months into the war in Iran, rising oil prices and stubborn inflation are driving mortgage rates to the highest level in a year.
The average 30-year fixed mortgage rate climbed to 6.66% this week, the highest since July of last year, according to Freddie Mac. That’s up from 6.58% last week, marking the biggest one-week jump in mortgage rates in 10 weeks.
Just a few months ago, mortgage rates dipped below 6% for the first time in years, fueling hopes that lower borrowing costs would revive the sluggish housing market.
But since the US and Israel began joint strikes on Iran in February, investors have grown increasingly concerned that higher energy prices will keep inflation elevated.
On Thursday, though, new inflation data showed that price increases slowed during a brief June truce in the Middle East. The Personal Consumption Expenditures price index dropped 0.1% from May, bringing the annual rate to 3.7%, according to the Commerce Department. The drop was largely driven by a temporary fall in energy prices that month.
