Housing is just one of the affordability issues on the November ballot
The housing law signed by President Trump will give Republicans and Democrats a common electoral victory before the midterm elections.
The renewed fighting between the United States and Iran has reignited uncertainty among investors, but mortgage rates have not moved much, data shows.
30-year fixed rate home loans continue to fluctuate around the mid-6% range. According to Freddie Mac, the average audience rating as of July 9 was 6.49%, up from the previous week’s average of 6.43%. At this time a year ago, the average interest rate on a 30-year fixed-rate mortgage was 6.72%.
Experts say that even though the situation in the Middle East is nerve-wracking, prospective home buyers should not let it deter them from purchasing a new home. Instead of focusing on weekly mortgage rate fluctuations, homebuyers should focus on things like credit scores and non-traditional down payment sources that can make a big difference in affordability.
“The key is not to wait for the perfect rate,” said Jeff Dergrahian, chief investment officer and chief economist at LoanDepot, a nonbank consumer mortgage lender. “The message for homebuyers is simple: Focus on finding a home that fits your budget and long-term plans, rather than waiting for the perfect rate.”
Why are mortgage rates less affected by tensions in the Middle East?
Economists say 30-year mortgage rates are directly tied to 10-year Treasury yields. If the yield on the 10-year Treasury note changes significantly in any way, mortgage rates typically follow suit.
So what drives the 10-year government bond yield? Usually any scenario that affects people’s desire for government securities.
For example, when inflation rises, people often abandon government bonds because high inflation erodes their fixed income. Government bond prices move in the opposite direction to yields, so if investors sell and bond prices fall, yields will rise sharply.
Oil prices initially rose on fears that the Strait of Hormuz would be closed again when fighting resumed between the US and Iran. “Interest rates rose this week as the cease-fire with Iran gradually disintegrated, raising concerns about further inflation and geopolitical instability,” Joel Varner, senior economist at Realtor.com, said in a blog post.
If oil prices had continued to rise, inflation fears could have taken hold and yields would have continued to rise. But then oil prices fell, providing some relief.
What else is holding back buyers?
Rising house prices are having an impact on buyers. The median sales price of existing homes reached a new high of $440,600 in June, marking the 36th consecutive month of year-over-year increases, the National Association of Realtors announced on July 9.
Analysts say Americans can work on improving their credit scores to get the best interest rates and terms, but prices will remain high if inventories remain low.
“If inventory does not increase consistently, home prices could accelerate,” said Lawrence Yun, NAR’s chief economist. “It is important to bring more supply to the market to expand homeownership opportunities.”
Young Americans blaze a new path to homeownership
Young Americans are often cited as being locked out of homeownership because they can’t afford it, but according to data provider Intercontinental Exchange’s July Mortgage Monitor, Gen Z accounted for one in five people in a homebuyer lockout in the three months ending in June (the highest ever). A purchase rate lock is when a lender guarantees a specific interest rate and points for a set period of time while your loan application is processed.
The oldest members of Generation Z are approaching 29 years old.
“Despite facing the most challenging home price environment in decades, young buyers are looking for ways to become homeowners,” said Andy Walden, director of mortgage and housing market research at InterContinental Exchange.
According to Intercontinental Exchange, many are increasing their down payments by tapping into funds other than savings.
“While 71% of homebuyers in 2026 relied on personal savings for their down payment, alternative sources other than savings now account for 29% of all purchase down payments, the highest share in seven years,” InterContinental Exchange said. Among buyers using alternative income sources, approximately one in five Gen Z buyers relied on a gift from a family member or a loan for their down payment.
How can Americans buy a home?
One of the first things buyers should know is what their credit score is. Financial experts said improvements needed to be made.
Lenders use credit scores as one measure to decide whether to approve a loan and the terms, such as interest rates. A high credit score tells lenders that you are at low risk of defaulting on your mortgage. One way to improve your credit score is to pay your rent on time. Half of renters don’t know that paying their rent on time can help improve their credit score, a FICO study found.
Most conventional mortgages require a minimum credit score of 620 or higher for homebuyer approval, but some first-time homebuyers may be eligible for special government-backed loans with more relaxed approval requirements, Equifax said.
Gen Z accounts for nearly one-third of all first-time homebuyer loans and 27% of Federal Housing Administration purchase loans, “reflecting both their growing presence in the market and their reliance on government-backed financing to overcome affordability challenges,” Intercontinental Exchange said in a report.
People looking to buy a home need to shop around for the best financing terms and interest rates, just as they would for any big-ticket purchase. Experts say many homebuyers don’t realize that multiple mortgage-related credit inquiries within a short period of time (usually 45 days) are treated as a single inquiry when calculating credit scores.
Experts say lenders are also competing for business and could be cut off.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Contact her at mjlee@usatoday.com and subscribe to the free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning..
