It seemed only a matter of time and that time is clearly now.
The 30-year benchmark hit a new 52-week high today, rising to 6.85% from 6.77% yesterday.
That’s the highest rate since last July and another blow to would-be homebuyers struggling with the foreclosure crisis.
And it could get worse before it gets better, as tensions in the Middle East cause oil prices to rise while fueling inflation.
If it continues, we may be talking about a return to 7-Handle mortgage rates next.
Real Estate Rates Now Highest Ever As of June 2025
The year got off to a good start for mortgage rates, with the popular 30-year fixed dipping below 6% for the first time since mid-2022.
But things took a turn for the worse at the end of February when the US began attacking Iran.
That led to a huge increase in energy prices and was made worse when Iran successfully closed the Strait of Hormuz.
Mortgage rates saw some easing in April and again in June in hopes of some sort of peace deal, but now we seem far from any real deal.
Recent escalations include attacks on Saudi oil tankers in the Red Sea, led by Houthi rebels.
That not only increases the level of war in many countries and regions, but also means that two important routes for the movement of oil and natural gas are at risk of being closed.
Now Brent crude futures are back above $100 a barrel and the threat of another wave of inflation is higher than ever.
Bonds do not like inflation because it lowers the value of the dollar. Similarly, MBS investors seek higher yields if inflation is expected to worsen in the near future.
As such, mortgage rates are under significant upward pressure, and now sit one-eighth of a percentage point below the dreaded 7% threshold.
Are 7% Mortgage Rates Just a Matter of Time?
We knew that the new 52-week high was only a matter of time for mortgage rates. What about a 7% mortgage rate?
Since the conflict began, I have argued that we could see a 7% loan, although each time we got closer, things seemed to cool down.
This latest hike could be different though as bond yields climb higher and the Fed may be forced to move to lower interest rates.
At a glance, the 10-year bond yield was near 4.70%, which is also a new 52-week high.
It was just under 4% when the dispute broke out at the end of February, then it rose to a higher price on the risk of 100 oil.
Now that the two important waterways are witnessing daily fighting, things may get worse.
It won’t take much to get more than 7%, with a 30-year fixed currently priced at 6.85%, according to Mortgage News Daily.
But it could depend somewhat on the Fed’s press conference next week, when new Chairman Kevin Warsh will field questions.
There will also be an interest rate decision, which has been very difficult hold on until the last few days, when the probability of boarding increases to about 40%.
The bond market is already in the red and if it thinks the Fed will start hiking again, things could get worse.
On the other hand, Warsh can come out and say the conflict in the Middle East temporarilyand that inflation is improving.
And in order to balance the Fed’s dual mandate, which includes higher employment, they can pause for now. At least for the July meeting.
Still, any further increases could be enough to push bond yields too high and take the 30-year to adjust as well.
Whether it gets to 7% or more remains to be seen, but we’re sure we’re getting close!
(photo: Eli Duke)
Before creating this site, I worked as an account manager for a real estate broker in Los Angeles. My experiences in the early 2000s inspired me to start writing about mortgages 20 years ago to help prospective (and current) home buyers better navigate the mortgage process. Follow me on X for the hottest.
