U.S. mortgage rates remain near their highest levels in more than a year as inflation concerns, deficit worries, Treasury yields and Middle East tensions keep borrowing costs elevated. Mortgage News Daily reported an average 30-year fixed rate of 6.87%, the highest since June 2025, while the Mortgage Bankers Association said the average contract rate on conforming 30-year fixed loans of $832,750 or less rose to 6.79% from 6.78%, with points easing to 0.65 from 0.66. MBA chief economist Mike Fratantoni said rates reached their highest level in four weeks as investors’ concerns about inflation and growing deficits pushed yields higher globally. Rates have risen nearly 70 basis points since U.S. and Israeli strikes against Iran began in late February, when the Mortgage News Daily rate was 5.99%; at 6.87%, a $450,000 home with 20% down implies about $2,363 in monthly principal and interest, $207 more than at end-February. In the latest MBA week, total applications rose 0.8%, purchase applications gained 2% but were still 0.2% below a year earlier, and refinance applications fell 1% and were 19% lower year over year. The share of adjustable-rate mortgages returned to 8%, a five-week high, while the average 5/1 ARM rate fell to 5.94%, underscoring a shift toward lower initial rates despite reset risk. National home prices rose 1.5% year over year in June, and Fannie Mae and the MBA each project an average 30-year rate of 6.7% in 2027.