08/27/2026
Middle East conflict is pushing borrowing costs higher while investors see a strong chance of a September Federal Reserve federal funds rate hike, adding pressure to mortgage rates as buyer demand weakens.
Here's what it means for your buyers:
The Iran war is adding pressure to rates globally: In the UK, five-year fixed rates rose from 4% in January to 4.8%, adding about $24,000 to the average buyer's borrowing costs.
The Federal Reserve could increase rates: Investors currently see a 42% chance that the Federal Reserve raises the federal funds rate at its September meeting, keeping mortgage rates elevated for buyers.
Mortgage demand is slowing: MBA reported applications fell 1%, with refinances down 2% and purchases down 0.3%, showing elevated borrowing costs continue to weigh on buyers and homeowners.
New-home sales are slowing: July sales fell 10.5% from June to their lowest level in six months, showing elevated borrowing costs continue to hold back buyers.
Higher rates don't automatically have to put a buyer's plans on hold. If the home and monthly payment work today, refinancing could be an option later if rates come down.
