Key Highlights

  • Average US 30-year Mortgage rates reached 6.67% this week, the highest level in more than a year.
  • Rates have risen from 5.98% before the Iran conflict began in late February to current levels.
  • UK five-year fixed mortgage rates rose to 5.66% in July, the first monthly increase since April.
  • Higher rates have added roughly $150 per month to the average US mortgage payment.

US Mortgage Rates Reach Highest Level in Over a Year

Mortgage rates in the US and several major European economies have risen in recent weeks as renewed tensions between Washington and Iran ripple through housing markets. Average rates on 30-year fixed-rate US mortgages reached 6.67% this week, according to official data, up from 6.43% at the beginning of July and 5.98% before the conflict began in late February. The increase comes despite the Federal Reserve holding short-term borrowing costs steady in 2026, reflecting market concerns that policymakers may struggle to contain Inflation triggered by the conflict.

Yields on 10-year Treasury bonds, the primary driver of US mortgage rate changes, have edged higher in recent weeks amid rising energy prices and inflation expectations.

European Mortgage Rates Also Under Pressure

In the UK, the average five-year fixed mortgage rate rose to 5.66% in July, the first monthly increase since April, according to data from Moneyfacts. The Bank of England has similarly held off from raising official rates this year, though the standoff between the US and Iran has increased anxiety in financial markets, pushing UK swap rates higher. In Germany, the representative 10-year fixed mortgage rate rose from 3.3% to 3.7% since early July, while France's 10-year rate rose from 3.02% in June to 3.15% in July.

Rising Costs Weigh on Housing Market Activity

The rate increases have added roughly $150 per month to the average US mortgage payment, compounding broader cost of living pressures linked to the conflict's impact on fuel prices. Real estate professionals note a "lock-in" effect across the US housing market, where homeowners holding lower rates from previous years are reluctant to sell, though buyers with genuine motivation to move continue to transact. In the UK, the number of sales agreed in July fell nearly 10% year-over-year, though the impact has varied significantly by region.