By AP — June 5, 2026
A modest pullback in U.S. long-term mortgage rates this week has provided some breathing room for prospective homebuyers, though uncertainty tied to the Middle East conflict continues to pressure borrowing costs and housing activity.
Freddie Mac reported Thursday that the average rate on a 30-year fixed mortgage declined to 6.48% from 6.53% a week earlier. That level remains below the roughly 6.85% average seen a year ago. When rates drop, buyers gain more purchasing power, and refinancing activity becomes more attractive to some homeowners.
Analysts say the recent run-up in rates has largely been driven by fears of higher inflation after the outbreak of war involving Iran, which disrupted tanker movements from the Persian Gulf and pushed oil prices higher. “This conflict is currently the main driver of still-high mortgage rates, as the oil shock ripples inflation fears throughout the global economy,” said Joel Berner, senior economist at Realtor.com.
Mortgage costs closely track the U.S. 10-year Treasury yield, which lenders use to price long-term loans. The 10-year yield was around 4.47% in midday trading Thursday, up slightly from 4.45% a week earlier and notably higher than the roughly 3.97% seen in late February before the war began.
In late February the average 30-year rate slipped just under 6% for the first time since late 2022; it has not fallen below that level since. Mortgage rates surged as recently as last week to their highest point since Aug. 28, when the 30-year averaged about 6.56%.
The mostly upward trend in rates this year and uncertainty about how high they might climb as bond markets react to geopolitical and inflationary pressures have weighed on the housing market. Sales of previously owned homes were essentially flat in April after falling year-over-year in the first three months of 2026, extending a slump that began in 2022 as rates rose from pandemic-era lows. Data on May existing-home sales is due next week.
Mortgage applications, which cover purchase loans and refinances, have softened. The Mortgage Bankers Association said applications fell 2.5% last week — the third consecutive weekly decline. Purchase applications remain slightly above year-ago levels but are moving at their slowest weekly pace since April. Refinancing activity has also eased as many homeowners hold out for lower rates.
Borrowers seeking shorter-term refinancing also saw relief: the average rate on a 15-year fixed mortgage dropped to 5.79% from 5.87% the prior week; a year ago it averaged about 5.99%, Freddie Mac said.
Despite higher rates, some markets are becoming more favorable for buyers. Inventory of homes for sale has increased in many areas compared with a year ago, and listing prices are beginning to fall. Realtor.com reported that the median asking price for U.S. homes listed for sale fell 2.4% year-over-year last month — the steepest decline in their data going back to 2017.
The combination of slightly lower mortgage costs this week and softening listing prices offers some respite for buyers and borrowers, but broader rate levels and geopolitical risks continue to cloud the outlook for housing and refinancing activity.