Mortgage Rates Drop to Near-Monthly Low Amid Iran Ceasefire Agreement

Federal Reserve Chair Kevin Warsh addressed the central bank’s forward guidance strategy during a press conference, indicating whether future rate cuts would be a topic of discussion.

Mortgage rates dropped this week to the lowest level in over a month, according to Freddie Mac. The average rate on the benchmark 30-year fixed mortgage fell to 6.47% from last week’s 6.52%. Freddie Mac’s latest Primary Mortgage Market Survey, released Thursday, highlighted the decline, marking the lowest rate since late April. The rate stood at 6.81% the previous year.

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The average rate on the benchmark 30-year fixed mortgage fell to 6.47%. (Daniel Acker/Bloomberg via Getty Images)

“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,” stated Sam Khater, Freddie Mac’s chief economist.

The average rate on a 15-year fixed mortgage also declined to 5.81% from 5.84% last week.

Elevated rates have persisted due to concerns over the Iran conflict, which influenced market volatility. On June 17, President Donald Trump signed a memorandum of understanding during meetings in France, with Iran participating remotely. The temporary framework includes an immediate ceasefire, reopening of the Strait of Hormuz, limits on Iran’s enriched uranium stockpile, and a 60-day window to negotiate a permanent agreement addressing its nuclear program.

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The deal includes provisions to reduce economic strain on Iran, such as access to some frozen assets and lifting of certain restrictions, though some conservatives criticize it as offering excessive concessions without immediate demands on Iran’s nuclear infrastructure.

“The previous weeks have been filled with constant back-and-forths, showing progress toward a resolution, only to be followed by heightened military action,” said Realtor.com senior economist Anthony Smith. “However, the latest rounds have proven more promising than previous periods of reprieve, as a tentative deal has now been drafted and now signed by President Trump.”

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Mortgage rates are influenced by factors including the Federal Reserve and geopolitics. While mortgage rates do not directly respond to Fed interest rate decisions, they closely track the 10-year Treasury yield, which remained around 4.45% as of Friday afternoon.

The U.S. central bank announced Wednesday it will maintain interest rates at their current range of 3.5% to 3.75%, following a period of rate cuts in late 2025. The move reflects concerns about elevated inflation, partly driven by supply shocks in sectors like energy.

Warsh’s decision marked a shift in the Fed’s approach, emphasizing a commitment to price stability without hedging. Markets reacted with a rise in the 10-year Treasury yield and increased speculation about a rate hike before year-end. Analysts noted that while the Iran ceasefire may eventually lower rates, uncertainty could delay progress.

FOX Business’ Bradford Betz and Eric Revell contributed to this report

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