Mortgage Rates Stay Put as Markets Weigh Fed Signals and Geopolitical Tensions

In short: Mortgage rates are still stuck in the mid-6% range. Fading geopolitical tensions have taken some pressure off oil prices and Treasury yields, but a more hawkish Fed and mixed economic data are keeping rates from moving meaningfully lower.

Mortgage rates held steady as geopolitical risk faded but Fed concerns lingered

Mortgage rates were little changed from last week, remaining in the mid-6% range. The oil-price shock tied to geopolitical tensions has eased, helping pull oil prices and some Treasury yields lower. But that relief has been offset by the Fed’s latest projections, which moved materially more hawkish and reinforced the idea that rates may stay elevated for longer.

The economic picture is mixed: official jobless claims point to a stable labor market, though some business surveys look softer, and consumers are still spending even as high prices, elevated rates, and housing costs weigh on sentiment. Zillow’s forecast is for rates to hold around 6.4%–6.5% through the summer before easing only gradually to roughly 6.2% by the end of 2026 — a drift lower, not a drop. 

What’s the impact on housing?

Rates in the mid-6% range are still a bit better than a year ago, and that continues to offer some support for buyers. But it is not enough to create a major affordability breakthrough. Zillow’s May market report showed how sensitive the market remains to borrowing costs: home sales and new listings fell behind last-year levels in May as mortgage rates rose, putting the housing recovery back on pause.

The bigger challenge is what happens later this year. Because Zillow’s forecast calls for mortgage rates to ease only gradually, year-over-year comparisons get harder in the second half of the year. If rates end 2026 near 6.2%, that would be roughly in line with the 6.1% to 6.3% range buyers saw in fall and winter 2025. Affordability could shift from being a modest tailwind relative to last year to more of a headwind, especially for listings and sales comparisons.

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