Mortgage Rates Hit 6.58% as Middle East Tension Reignites Inflation Fears
Thirty-year fixed mortgage rates climbed past 6.5% in mid-July, reaching 6.58% by late month as renewed conflict in the Middle East pushed oil prices higher and revived inflation concerns. Borrowers face mounting monthly payments even as housing inventory remains tight.
Freddie Mac's average rate for a 30-year fixed-rate mortgage reached 6.58% for the week ending July 23, its highest level since August 2025. Rates have been hovering in the 6.5%–6.7% range for nine consecutive weeks, creating a double squeeze for foreign buyers: elevated rates combined with limited inventory and high home prices.
Why Rates Keep Rising
Interest rates on home loans have risen since the beginning of the U.S. war in Iran in late February. The Middle East conflict put upward pressure on oil prices, which can make other items more expensive to manufacture and transport. Put simply, higher oil prices mean higher inflation—and higher inflation means higher interest rates. Recently, renewed conflict in the Middle East is making oil prices jump back up, going over $90 a barrel. When energy costs more, it often leads to worries about prices for everything else going up too—that's inflation.
Stubbornly high mortgage rates and high housing costs have started to hurt home sales. During the four-week period ending July 12, week-over-week pending home sales in the U.S. dropped by 2.2%. For expats working toward homeownership, the path has become steeper: the median monthly payment was $2,198 in May 2026—nearly double historical averages. Refinancing an existing mortgage is also costly; rates on 30-year refinance loans approached 7.1% by late July. If you are considering a home purchase or refinance, locking a rate now shields you from potential further increases, though rates are unlikely to fall sharply before year-end.
Sources
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