Mortgage rates climbed to a new nine-month high Thursday as inflation fears outweighed fledgling investor optimism over the prospect of a peace deal with Iran.
The average rate on 30-year fixed home loans rose to 6.53% for the week ending May 28, up 2 basis points from 6.51% the previous week, according to Freddie Mac. For perspective, rates averaged 6.89% during the same period in 2025.
“The 30-year fixed-rate mortgage averaged 6.53% this week,” says Sam Khater, Freddie Mac’s chief economist. “Pending home sales have increased three months in a row, indicating there’s latent demand and homebuyers are ready to jump back into the market if mortgage rates decline.”
The modest uptick happened even as the 10-year Treasury yield, which mortgage rates closely track, dropped from 4.66% on May 19 to just under 4.5% by the middle of the week, driven by a series of sometimes contradictory posts on Truth Social by President Donald Trump suggesting that a tentative agreement with Iran might be taking shape.
However, the president was short on details about the progress of the negotiations, and during a cabinet meeting on Wednesday he said he will not be rushed into a peace deal, warning that Tehran’s efforts to “out-wait” him will fail because he said he does not care about the upcoming midterm elections.
Three months into the conflict, rates have climbed 55 basis points from multiyear lows of 5.98%—a trend reflecting rising prices and inflation expectations.
“When bond markets sense more uncertainty and greater price pressures, rates go up,” says Realtor.com® senior economist Jake Krimmel. “Unfortunately for prospective homebuyers, that’s exactly what the war in Iran has delivered.”
Yet, Krimmel reminds that there is an important silver lining for housing demand right now: Rates remain below where they were a year ago, which he says may explain why this spring has proven more resilient than the tariff-burdened one in 2025.
“Despite higher rates and more economic uncertainty than expected, this spring is shaping up as the most active in four years,” notes the economist.
At the same time, affordability has eroded on two fronts: higher mortgage rates and inflation quietly eating away at real wage gains. While buyers have more homes to choose from and asking prices continue to soften, their dollars don’t stretch as far as they did before the outbreak of the war in the Middle East in late February.
“A resolution to the conflict, therefore, would do a world of good for mortgage rates, consumers, and housing market momentum,” concludes Krimmel.
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.
