Mortgage Rates Hit 6.69% as Markets Await Critical Deal To Reopen Strait of Hormuz

Mortgage rates hit their highest level in over a year in a fresh blow to homebuyers, as the wait for a potential deal with Iran to reopen the strategic Strait of Hormuz continued this week. 

The average rate on 30-year fixed home loans climbed to 6.69% for the week ending Aug. 6, up 3 basis points from 6.66% the previous week and the highest since, according to Freddie Mac.

This is the first time in 10 months that rates have been higher than their year-ago level. For perspective, rates averaged 6.63% during the same period in 2025.

"The 30-year fixed-rate mortgage averaged 6.69% this week," says Sam Khater, Freddie Mac's chief economist. "While mortgage rates continue to influence affordability, the housing market is showing signs of adjustment, with listing prices modestly below year-ago levels and for-sale inventory improving from the limited supply seen in recent years."

The latest uptick in borrowing costs comes on the heels of a choppy week in the bond market, which saw the 10-year Treasury yield hit an 18-month high above 4.7% before pulling back several basis points on renewed hopes that the U.S. and Iran are nearing a peace deal after President Donald Trump said that negotiations were in progress. 

Tehran, however, denied engaging in any direct talks with the U.S., saying that it is only negotiating with Oman to reopen the Strait of Hormuz, a crucial shipping route for global oil supplies.

Realtor.com® economist intern Glen Morgenstern notes that mortgage rates have been slow to follow the pullback in treasury yields. He predicts that Friday’s unemployment report, next week's inflation report, and how the Hormuz talks resolve, will determine whether that gap closes in the coming weeks.

“The bond market’s recent volatility traces back to a Federal Reserve that has been harder to read amid a macro context without a clear policy prescription,” says Morgenstern. 

At its July meeting, the Federal Open Market Committee (FOMC) held rates steady in a 9-3 vote, but three regional policymakers dissented in favor of a hike. The same trio dissented at April's meeting, too. 

Fed Chair Kevin Warsh has continued to withhold forward guidance, leaving markets to parse incremental data for clues on the central bank’s next move on rates. 

"That’s part of why this week’s Hormuz headlines moved yields as much as they did," notes Morgenstern. "With the Fed offering few signals of its own, any news that touches on inflation outlook, including energy prices tied to the Strait of Hormuz, carries outsized weight right now."

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.