The interest rate on a 30-year, fixed-rate mortgage rose to its highest level since August on Thursday, upending several weeks of steady rates as the U.S.-Israeli war with Iran approached its third month without significant progress toward peace.
The 30-year rate hit 6.51 percent, the mortgage finance giant Freddie Mac said. That’s up from 6.36 percent the week before.
That rate was still significantly below the peak of 7.79 percent in October 2023. But the increase comes at a time when consumers in the United States are grappling with more debt and higher prices because of constrained energy supplies. Disruptions in the Strait of Hormuz, a vital oil passageway in the Persian Gulf, has choked off about 20 percent of the world’s oil supply since the war began on Feb. 28.
That has spiked costs on everyday items including fuel and groceries. On Thursday, the average price for a gallon of regular gasoline in the United States was $4.56, according to the AAA motor club. That was 53 percent higher than before the war began.
The S&P 500 dipped shortly after the mortgage rate was announced at noon Thursday, and was down more than 0.4 percent.
Investors have grown increasingly anxious about rising inflation. This week, bond markets pushed the rates on U.S. Treasuries to levels not seen since the global financial crisis nearly 20 years ago. A report from the Bureau of Labor Statistics said last week that wholesale prices rose in April at their fastest rate in four years. That news came on the heels of government data that showed inflation rose at its fastest pace in nearly three years.
Mortgage rates are influenced by yields on the 10-year Treasury note, which last week rose to the highest level since July after data pointed to accelerated inflation rates. This week, the yield on the 30-year Treasury note also spiked to its highest point since 2007. The rising rates are pushing up borrowing costs for governments, homeowners and businesses.
