The average 30-year fixed mortgage rate hit 6.65% for the week ending July 10, the highest level since August 2025, and homebuyer demand is responding accordingly.
Purchase applications fell 7.3% from the prior week and are now at their lowest point since February, according to the Mortgage Bankers Association.
The Iran peace deal that briefly brought rates down to 6.47% in June has been fully unwound and then some.
The culprit is fuel prices. July brought a fresh uptick in oil costs, the ceasefire fraying in the Middle East pushed oil back above $79 a barrel, on top of rates that never meaningfully recovered from their wartime highs in the first place.
Matthew Graham of Mortgage News Daily put it plainly:
"We were already in a high range and the uptick in fuel prices simply gave rates a push."
Rates touched 6.75% Monday, matching the May 19 peak and the highest daily reading since July 2025, before pulling back slightly Tuesday when the June Consumer Price Index came in much lower than expected.
June inflation was better. The market's concern is that July's oil spike means July's inflation numbers, due in August, will not be.
That concern is keeping rates elevated even as Tuesday's CPI briefly flashed hope.
For prospective buyers, 6.65% means a $100,000 mortgage costs roughly $639 per month in principal and interest. That is the math that is driving purchase applications to their lowest level in five months.
For anyone hoping for relief by year-end: the Fed held rates steady at its last meeting and Fed Chair Warsh gave no signal of a cut coming at his congressional testimony Tuesday.