It feels like nothing will really help mortgage rates move lower at the moment.
Sure, they came down a handful of basis points from a week ago, but the movement was pretty negligible.
The 30-year fixed hit a fresh 52-week high in late July, at around 6.875%, but remains around 6.75%.
In other words, rates are an eighth of a percent below their highs, this despite good news on the inflation front.
So what’s it going to take to get mortgage rates materially lower?
Mortgage Rates Appear Stuck Near Their Highs
As noted, we had a pair of good reports last week in terms of inflation moderating.
These would typically be both bond and mortgage rate-friendly, and they did result in rates easing a bit.
However, that’s kind of the rub. Rates only eased a bit. They didn’t get a big drop that many probably hoped for.
And let’s face it, inflation is the focal point right now for mortgage rates (and the wider economy).
Labor took a back seat to inflation once the Iran conflict got underway.
Conversely, last year seemed to be largely about the labor market because inflation appeared to be finally under control.
Enter late February and an unexpected conflict breaks out between the U.S. and Iran.
That sent oil prices markedly higher, leading to a second wave of inflation concerns.
It also reopened the door for Fed rate hikes after they had cut rates six successive times (to offset the 11 prior hikes).
Many were expecting additional cuts when 2026 began. Then another geopolitical event took place and cuts turned to possible hikes.
It seemed a hike was just a matter of time until we got both a weak jobs report for July and two favorable inflation reports last week.
Both CPI and PPI came in at or below consensus, allowing the market to breathe a sigh of relief.
It also greatly reduced the odds of a Fed rate hike in September, which had been odds-on a week ago and now the odds of standing pat are the favorite at 65%, per CME FedWatch.
So that was certainly a win and pushes a hike further out or completely out if the data continues to be favorable.
But given the limited movement in both mortgage rates and bond yields, it’s a little disconcerting.
It makes you wonder what it’s going to take to get mortgage rates back on the lower end of the 6% range, where they stood before the war broke out.
Are Mortgage Rates Mostly Higher Because of Iran?
That begs, or perhaps answers the question, are mortgage rates higher because of Iran?
The long and short of it is probably yes. While there are other factors, such as the massive AI capex taking place and big fiscal deficits, it’s mostly Iran.
The situation with Iran was the only major shift since late February and early March.
If you look at a mortgage rate chart, rates surged higher in early March as the conflict grew in intensity.
The 30-year fixed climbed from sub-6% to as high as 6.875%, and now sits at 6.75%.
Which brings me back to the point of this post. While rates have eased some, they remain near their worst levels since the conflict began.
And it seems the only way to get them meaningfully lower is progress on that front.
We’ve already gotten the cool jobs report and the better-than-expected inflation reports.
Those have only stopped mortgage rates from going any higher.
Without a solution to the Middle East conflict, mortgage rates likely won’t be able to get back to 6.50% or lower anytime soon.
Read on: Check out my mortgage rate calculator to compare different rates with ease.
(photo: lorenz.markus97)
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 20 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
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