In short: Mortgage rates are likely to move a bit higher as renewed geopolitical tensions push oil prices and Treasury yields up from last week’s lows. Zillow’s forecast still points to a drift, not a drop, with rates easing only gradually to roughly 6.3% by the end of 2026.
Mortgage rates ticked higher as geopolitical tensions resurfaced
Oil prices are back in focus amid a reported end to the ceasefire between the U.S. and Iran. Crude prices lifted off last week’s lows, though prices remain well below their peak-conflict highs. The 10-year Treasury rose modestly in response, and mortgage rates are likely to follow. Zillow’s forecast is for rates to ease only gradually, drifting to roughly 6.3% by the end of 2026. This modest upward revision to the forecast is partly driven by Government-Sponsored Enterprise (GSE) purchases of mortgage-backed securities (MBS) falling short of market expectations, which dampened a source of downward pressure against lingering inflation.
What’s the impact on housing?
June’s housing activity was surprisingly upbeat, reversing May’s decline. Zillow’s June market report showed home sales jumped 5.9% year over year, new listings grew 3%, and the typical monthly mortgage payment was 2.5% below year-ago levels — a real, if modest, affordability tailwind for buyers.
That tailwind gets harder to lean on in the second half of the year. If rates end 2026 near 6.3%, that would be slightly higher than the range buyers saw in fall and winter 2025 — meaning affordability could shift from a tailwind relative to last year to more of a headwind, especially when comparing listings and sales.