The average rate on 30-year fixed home loans ticked down to 6.47% for the week ending June 18, following a tentative U.S.-Iran peace deal.
Mortgage rates retreated Thursday after President Donald Trump signed a preliminary accord with Iran, laying the groundwork for a more permanent peace deal—and promising greater economic stability just in time for the summer.
The average rate on 30-year fixed home loans fell to 6.47% for the week ending June 18, down 5 basis points from 6.52% the previous week, according to Freddie Mac. For perspective, rates averaged 6.81% during the same period in 2025.
"The 30-year fixed-rate mortgage decreased this week averaging 6.47%," says Sam Khater, Freddie Mac's chief economist. "Incoming data continues to reflect a resilient consumer, with retail sales improving and pending home sales strengthening, suggesting purchase demand is continuing to modestly improve."
The latest mortgage rate readout was preceded by another round of U.S.-Iran peace talks, which culminated with the signing of a 14-point memorandum of understanding on Wednesday, aiming to reopen the Strait of Hormuz shipping route and lift sanctions on Iran.
"A lasting resolution to the conflict would help bring mortgage rates down, boost consumer confidence, and housing market momentum heading into summer; however, the path will likely be rocky," predicts Realtor.com® senior economist Anthony Smith.
Also on Wednesday, the newly seated Federal Reserve Chairman Kevin Warsh joined a unanimous 12-0 vote to hold the federal funds rate unchanged in a range of 3.5%-3.75%, where it has stood since December.
While the pause on rates was widely expected and priced in, Warsh used his first decision as chair to signal a broader regime aimed squarely at combating inflation.
"The easing bias is gone, forward guidance has been shelved, and the committee's statement was rewritten around a single, unhedged commitment to delivering price stability," explains Smith.
Markets responded with a jump in the 10-year Treasury and rising odds of a rate hike before year's end. As of Thursday, the odds of a 25-basis point increase in December are near 39%, according to CME FedWatch.
"The logic of Warsh's approach, earning credibility by following through rather than telegraphing, is sound and ultimately the path to lower long-term rates," contends Smith. "But a market without clear guidance may demand a premium in the near term, which could keep mortgage rates from falling as quickly as the Iran ceasefire alone might suggest."
For homebuyers, the spring market has shown more resilience than the rate environment might suggest. Contract signings climbed 3.8% month over month in May as sellers adjusted prices to attract demand and buyers responded.
At the same time, listing prices have now fallen year over year for seven consecutive months, and inventory remains above last year's levels.
"A lasting resolution to the conflict would help bring mortgage rates down, boost consumer confidence, and housing market momentum heading into summer; however, the path will likely be rocky," forecasts Smith.
How mortgage rates are calculated
Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.
When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to increase. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates to fall.
The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account.
Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.
How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you'll receive. The higher the credit score, the lower the interest rate you'll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a "fair" rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. Ultimately, they want to make sure you're able to pay back the loan.