The average rate on a U.S. 30-year fixed mortgage rose six basis points Monday to 6.87%, its highest level since June 2025, according to Mortgage News Daily. The rate has increased 12 basis points since last Thursday and more than 30 basis points over the past two months.

Mortgage News Daily Chief Operating Officer Matthew Graham said the gradual increase has been driven by inflation expectations, heavy bond issuance and continued economic resilience.

Markets had expected mortgage rates to decline this year, but the war in Iran and the resulting rise in oil prices changed that outlook. The 30-year fixed rate stood at 5.99% in late February, one day before the conflict began.

For a median-priced home of approximately $450,000 with a 20% down payment, the monthly principal and interest payment on a 30-year mortgage is now about $2,363—$207 more than in late February.

Higher rates also reduce the number of qualified borrowers by making it harder to meet lenders’ debt-to-income requirements. Meanwhile, limited housing supply is pushing prices higher again in some markets.

The latest S&P Cotality Case-Shiller National Home Price Index showed that U.S. home prices rose 1.5% year over year in June, up from 1.2% in May. Analysts said high borrowing costs continue to pressure prospective buyers, while existing homeowners remain reluctant to give up the low mortgage rates they secured in previous years.