The average U.S. 30-year fixed mortgage rate climbed to 6.75% on Tuesday, the highest level since July 2025, according to data from Mortgage News Daily, prompting warnings from analysts.
Market commentator The Kobeissi Letter warned the move could mark the beginning of another leg higher for borrowing costs.
"We believe the average rate on these mortgages will cross above 7.00% soon," The Kobeissi Letter said in a thread on X, adding that "inflation is simply too hot."
The account also referenced Mortgage News Daily's daily rate survey while highlighting that average mortgage rates had surged from below 6% before the Iran war to nearly 6.75% this week.
Rates have jumped 33 basis points in just 10 days. The increase has already started affecting affordability. Monthly payments on a median-priced $420,000 home have risen by roughly $167 compared with earlier rate levels.
Shares of major homebuilders also declined on Tuesday, with D.R. Horton, Inc. (NYSE:DHI) falling 2.01%, Lennar Corporation (NYSE:LEN) slipping 0.98% and PulteGroup, Inc. (NYSE:PHM) losing 0.65% as rising mortgage rates renewed affordability concerns across the housing market.
Bond Market Pressure Builds
The Kobeissi Letter broadly tied the mortgage surge to mounting pressure in the Treasury and bond markets.
The commentary pointed to the U.S. budget deficit reaching $1.2 trillion during the first six months of fiscal 2026, while total U.S. debt climbed to a record $39 trillion. According to the thread, heavy Treasury issuance is flooding the bond market and pushing yields higher.
The account also noted markets entered 2026 expecting as many as four Federal Reserve rate cuts. Now, traders are increasingly pricing in the possibility of future rate hikes instead.
The Kobeissi Letter added that the 10-year Treasury yield has now climbed above levels seen during President Donald Trump's earlier tariff-related market volatility in 2025.
Housing Affordability Concerns Return
The latest jump in mortgage rates extends a broader trend already building across housing markets in recent weeks.
Earlier reports highlighted rising borrowing costs tied to elevated Treasury yields, persistent inflation concerns and geopolitical tensions linked to the Middle East conflict. Mortgage rates in the U.S. had already climbed above 6% earlier this month as lenders reacted to rising government borrowing costs and fears that higher oil prices could keep inflation elevated.
Housing affordability pressures have also continued weighing on buyers. The National Association of Realtors previously cut its 2026 home sales growth forecast as affordability concerns and weaker consumer confidence slowed demand.
At the same time, separate housing data showed many buyers had started adapting to a "higher-for-longer" mortgage environment, even as refinancing activity weakened and homeowners increasingly avoided giving up lower pandemic-era mortgage rates.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
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