Key facts
- The 10-year Treasury yield reached a 2026 peak of 4.75%, influenced by high oil prices.
- Mortgage rates for 30-year conforming loans averaged 6.92%, a slight decrease from the prior week.
- Despite rising Treasury yields, mortgage spreads are keeping rates below 7%.
- Mortgage application activity fell 6.4% last week, with refinances declining 10%.
- Wages have outpaced home-price growth, contributing to housing affordability.
- New home sales increased by 1.6% from May to June.
Treasury yields have surged to a 2026 peak of 4.75%, driven by high oil prices linked to Middle East conflict, yet mortgage rates have seen a slight cooling. The average rate for 30-year conforming loans dipped to 6.92%, while FHA loans also saw a minor decrease, though jumbo loans edged up slightly.
Despite the upward pressure on yields, mortgage spreads have remained relatively low, preventing rates from climbing significantly higher. HousingWire Lead Analyst Logan Mohtashami noted that current mortgage spreads, while above historical averages, are not at levels that would push rates to their worst observed points in recent years.
Mohtashami also highlighted that wage growth has outpaced home price appreciation over the past two years, contributing to housing affordability. Home prices have seen modest growth of 1%-2% annually, which he contrasted with the higher growth rates of 2020 and 2021.
However, mortgage demand experienced a notable decline, with overall application activity falling by 6.4%, led by a 10% drop in refinances. Bob Broeksmit, CEO of the Mortgage Bankers Association, cited elevated borrowing costs as a challenge for prospective homebuyers this summer.
Mat Ishbia, CEO of United Wholesale Mortgage, discussed the Federal Reserve's stance on interest rates, noting that Fed Chair Kevin Warsh believes broader monetary policy, rather than immediate rate cuts, will drive mortgage rates down. Ishbia also mentioned the Trump administration's focus on a regulatory agenda to reshape the U.S. mortgage market.
New home sales saw a modest increase of 1.6% from May to June, though they remain down 5.5% year over year. Ishbia described the current purchase market as busy despite higher rates and affordability challenges, suggesting that further rate drops could stimulate even higher sales.