Mortgage Rates Today, Thursday, May 7: A Substantial Drop

Mortgage rates moved in opposite directions this week as markets processed diplomatic signals around the Iran war. NerdWallet data showed a sharp drop on Thursday followed by a slight uptick on Friday, underscoring the conflict's continued influence on borrowing costs.

The average interest rate on a 30-year, fixed-rate mortgage fell to 6.15% APR on Thursday, May 7, a decline of 23 basis points from the previous day and 12 basis points lower than a week earlier, according to rates provided to NerdWallet by Zillow ^[1]. The drop came as the U.S. put forward a concrete proposal for ending the Iran war, which NerdWallet characterized as "Big News" that prompted a favorable market reaction ^[1].

By Friday, May 8, the average rate had risen to 6.22% APR, seven basis points higher than Thursday's level ^[2]. NerdWallet reported that markets have shown fatigue in reacting to developments from the Middle East, noting that early in the conflict "every update was a market mover" but that it now takes major developments to shift pricing ^[2].

The Iran war has been a primary driver for mortgage rates as investors respond to geopolitical uncertainty ^[1][2]. Concerns about rising fuel prices tied to Iran's strategic position as an oil producer and its location bordering the Strait of Hormuz have contributed to inflation fears that shake the bond market ^[1]. Mortgage rates are benchmarked to the 10-year Treasury note, whose yield has remained above 6% ^[2].

On the domestic front, the Federal Reserve held its benchmark interest rate steady at its most recent meeting, marking the third consecutive meeting with no change ^[1]. The central bank does not set mortgage rates directly, but its influence over U.S. markets means rate movements often anticipate Fed actions ^[1].