Mortgage rates surge to June 2025 highs as oil prices climb

Mortgage rates have climbed to their highest levels since June 2025 as new Middle East attacks push oil prices higher and bond yields rise in response. The average 30-year fixed mortgage reached 6.87% by late August, according to Mortgage News Daily, with rates continuing to rise after U.S. airstrikes near the Strait of Hormuz.

Key Takeaways

• The average 30-year fixed mortgage hit 6.87% in late August—the highest since June 2025—after rising 12 basis points in four trading days.
• Rising oil prices from renewed Iran conflict hostilities are pushing bond yields higher, and mortgage rates typically follow those yields.
• On a $450,000 home with 20% down, monthly principal and interest is roughly $207 higher than before the war began in late February.
• Zillow data showed the 30-year fixed at 6.59% on September 1, while the 30-year refinance rate averaged 6.72%.
• Forecasts now expect 30-year rates to stay between 6.60% and 6.80% through 2026, reversing earlier expectations of falling rates.

Why are mortgage rates rising right now?

A jump in oil prices after renewed hostilities in the Iran war is pushing bond yields higher, and mortgage rates are following suit. Mortgage News Daily reported the average 30-year fixed loan jumped 6 basis points on Monday, August 31, to 6.87%.

Yahoo Finance noted that fixed mortgage rates moved higher on Tuesday, September 1, following U.S. airstrikes on Iranian rocket launchers over the weekend. According to the Zillow lender marketplace, the 30-year fixed stood at 6.59%, up four basis points from the prior day.

Matthew Graham, chief operating officer at Mortgage News Daily, described the move as more of a slow grind than an explosive surge, fueled by inflation expectations, elevated bond issuance, and economic resilience.

How much have mortgage rates climbed since the conflict began?

The day before the Iran war started, at the end of February 2026, the rate on the 30-year fixed was 5.99%, according to CNBC. Borrowers are now paying nearly a full percentage point more than six months ago.

Since Thursday, August 28, the rate rose 12 basis points and climbed more than 30 basis points over the prior two months. The 15-year fixed reached 6% on September 1, up nine basis points from the previous Monday, per Zillow data cited by Yahoo Finance.

For someone buying a $450,000 home with 20% down on a 30-year fixed mortgage, the monthly principal and interest payment today would be $2,363—$207 a month more than at the end of February.

What does this mean for homebuyers and refinancers?

When rates rise, fewer borrowers can qualify for a mortgage because higher payments shift debt-to-income ratios that lenders rely on for safe lending. This comes on top of higher home prices accelerating again in some markets due to lean supply.

Nationally, home prices in June were up 1.5% year over year, up from the 1.2% rise in May, according to the latest S&P Cotality Case-Shiller home price index. Rebecca Kaufman of S&P Dow Jones Indices noted that as financing costs stay high, current homeowners remain reluctant to give up low rates secured in prior years.

Refinance rates are typically higher than purchase rates. On September 1, the average 30-year refinance rate was 6.72%, according to Zillow data reported by Yahoo Finance.

Will mortgage rates fall again in 2026?

The expectation had been for falling rates this year, but the war with Iran and its resulting rise in oil prices upended that outlook. The Mortgage Bankers Association expects the 30-year rate to range between 6.60% and 6.70% through 2026, per Yahoo Finance.

Fannie Mae predicts a 30-year average rate between 6.70% and 6.80% for the rest of the year. Both organizations forecast rates remaining near current levels through 2027, suggesting relief may be limited in the near term.

As economic shocks reshape borrowing costs, staying informed on broader market trends—including coverage in our Future Tech & AI Wonders section—can help buyers and homeowners plan their next move.