Mortgage Rates May Hit 7% by Year-End as Iran-Driven Inflation Lifts Bond Yields
Updated
Updated · CBS New York · May 25
Mortgage Rates May Hit 7% by Year-End as Iran-Driven Inflation Lifts Bond Yields
7 articles · Updated · CBS New York · May 25
Mid-to-upper 6% mortgage rates are likely to persist through 2026, with several housing experts saying a prolonged Iran conflict could push 30-year rates into the low 7% range.
Rising inflation is the main driver: higher oil and shipping costs have fueled bond selling, lifting Treasury and mortgage-backed security yields that feed directly into home-loan pricing.
A 50% probability of a Fed rate hike by year-end, according to one mortgage executive, has further dimmed hopes for any 2026 rate cuts and reinforced expectations for elevated borrowing costs.
Higher rates and inflation are squeezing affordability on multiple fronts, raising monthly payments while also inflating home prices, insurance costs and other expenses that cut into down payments and loan eligibility.
Experts still see a ceiling rather than an endless climb, arguing rates should ease once the Iran conflict subsides, oil prices settle and bond markets regain confidence on inflation.
How quickly could mortgage rates fall for homebuyers if the conflict in Iran were to suddenly end?
Can a new Fed Chair's dovish policy overcome inflation driven by overseas conflict to actually lower mortgage rates?