Mortgage Rates Rise to 6.49% Despite Iran Deal as Buyers Face a ‘New Normal’

Mortgage rates ticked up Thursday, signaling that the recent U.S.-Iran peace agreement and accompanying drop in oil prices have not been enough to ease economic uncertainty.

The average rate on 30-year fixed home loans advanced to 6.49% for the week ending June 25, up 2 basis points from 6.47% the previous week, according to Freddie Mac. For perspective, rates averaged 6.77% during the same period in 2025.

"The average 30-year fixed mortgage rate was little changed this week at 6.49%," says Sam Khater, Freddie Mac's chief economist. "Rates have remained relatively stable over the last six weeks. Meanwhile, purchase activity eased modestly and refinance activity has continued to pick up recently, reflecting borrowers’ responsiveness to current rate levels."

On Wednesday, crude oil prices plunged 4%, sending 10-year Treasury yields down more than 8 basis points to 4.406%—but the move failed to translate into a drop in mortgage rates.

Thursday’s mortgage reading—the first of the summer—marks the sixth consecutive week of rates staying near 6.5%, signaling stability, albeit at elevated levels. 

Realtor.com® senior economist Jake Krimmel says the shift comes on the heels of an extremely volatile spring, which saw rates swinging from 6.2% in late March to 6.46% in early April, back down to 6.23% in late April, and then surging past 6.5% by late May.

Krimmel notes that mortgage rates are determined by where bond markets expect inflation to be.

The war in Iran delivered bond market uncertainty and consumer price pressure in equal measure, and mortgage rates responded accordingly, climbing more than 50 basis points from multiyear lows of 5.98%. 

However, there are signs that buyers of existing homes may be adapting to this elevated rate environment as the new normal. In May, both pending sales and existing home sales showed modest improvement.

Sellers appear to be adjusting as well, with listing prices now down year over year for seven consecutive months.

Meanwhile, new home sales and construction starts continue to struggle with affordability headwinds.

"Still, rates remain more than 30 basis points below where they stood this time last year," points out Krimmel. "That gap is reason enough to hope 2026 can avoid a second consecutive cruel summer."

How mortgage rates are calculated

Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.

When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to increase. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates to fall.

The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account.

Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.

How your credit score affects your mortgage

Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you'll receive. The higher the credit score, the lower the interest rate you'll qualify for.

The credit score you need will vary depending on the type of loan. A score of 620 is a "fair" rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.

Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.

Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. Ultimately, they want to make sure you're able to pay back the loan.