Mortgage rates could be climbing back above 7% shortly, as gains in the 10-year Treasury yield pushed one data point close to this level.

On Thursday morning, the 10-year Treasury yield, which earlier in the week had been flirting with the 4.6% mark, zoomed past this to break 4.7%. The story behind the increase remains the tensions with Iran leading to rising oil prices. Market observers are fearing prices reaching $100 a barrel as a result.

The last time the 10-year was this high was Jan. 15, 2025.

This gain is not yet seen in the Freddie Mac Primary Mortgage Market Survey results.

The 30-year fixed-rate mortgage averaged 6.58% on July 23, a gain of 3 basis points from last week's 6.55%. This rate is now at the same level where it was last Aug. 21. But unlike the 15-year, it remains below where it was one year ago, at 6.74%.

A year ago at this time, the 30-year FRM averaged 6.74%.

Speaking of the 15-year FRM, it was at 5.96%, up from a week ago when it averaged 5.93%, and one year ago at this time at 5.87%.

Lender Price data published on the National Mortgage News website put the 30-year fixed rate mortgage at 6.95%. Another product and pricing engine, Optimal Blue had the conforming 30-year FRM with daily increases to 6.6% as of July 22 from 6.54% the previous Friday.

"Longer term inflation expectations remain relatively contained, but an elevated term premium suggests investors are demanding more compensation for uncertainty," Kara Ng, senior economist at Zillow Home Loans, said in a Wednesday evening statement. "The 30-year mortgage rate has consequently returned to levels last seen 11 months ago."

At the time Les Blotsky, vice president, secondary marketing and senior trader at Benchmark Mortgage, made his comments on Wednesday, the 10-year was above 4.6% for a few days, with the 30-year fixed in the upper 6% area.

"The wildcard is energy: the conflict around Iran and the Strait of Hormuz has put a risk premium back into oil, and that feeds directly into the inflation expectations the Fed is watching," Blotsky said. The market is not expecting any movement at the upcoming July Federal Open Market Committee meeting, with a possible hike later in the year, he noted.

"Rather than call a direction, I'd say rates are likely to stay range-bound at these levels until we get clarity on inflation and on the geopolitical picture."

In the short term, purchase activity moved higher in spite of the rate increases, the Mortgage Bankers Association's Weekly Application Survey for the week ended July 17 found.

The conforming 30-year fixed average rose 4 basis points to 6.69% from the prior week.

Application volume gained 1.9%, helped by a 6% rise in purchase activity.

This shows the continued strong homebuyer demand, MBA President and CEO Bob Broeksmit, said in a Thursday morning statement.

"As inventory improves in many markets, more prospective buyers are finding opportunities to enter the market even as borrowing costs remain elevated," Broeksmit said. "While some economic uncertainty may persist in the coming months, housing demand and a growing supply of homes should continue to support purchase activity."