US mortgage rates climb to highest level in over a year as geopolitical tensions fuel inflation fears

The average contract interest rate on a 30-year fixed-rate mortgage hit 6.97% for the week ending September 11, according to the Mortgage Bankers Association. That’s an increase of 12 basis points from the prior week and the highest reading since May 2025. Rates have climbed roughly 88 basis points since late February, effectively erasing months of progress and putting the 7% threshold back within arm’s reach for many lenders. Applications are falling fast Total mortgage applications dropped 4.1% week-over-week, according to the MBA’s latest survey. The purchase index slipped 0.8%. The refinance index took a far harder hit, plunging 8.8% to its lowest level since May 2025. Freddie Mac’s separate weekly survey painted a similar picture, pegging the 30-year fixed average at 6.76% for the survey period ending around September 10. That figure was up 5 basis points from the prior week. What’s driving rates higher The ongoing conflict between Israel and Iran has rattled global energy markets and sent oil prices climbing. Higher energy costs feed directly into inflation expectations, and inflation expectations feed directly into the yields investors demand on long-term debt. Ten-year Trea...