Iran war drives mortgage rates to six-month high
Rates moved higher for the fourth consecutive week, pushed up by the ongoing US-Iran conflict and its ripple effects on oil prices and inflation expectations. The 10-year Treasury reached 4.46% today, up from 4.42% yesterday. Freddie Mac's weekly survey put the 30-year fixed rate at 6.38% as of March 26 — a six-month high — up from 6.22% the week prior.
The connection between a war in the Middle East and your mortgage rate isn't always obvious, but the math is direct. Oil prices have climbed more than 30% since the conflict started in late February, with crude sitting near $105 a barrel. Higher energy costs feed into broader inflation expectations — if oil costs more, so does everything it touches. Bond investors demand a higher yield to compensate for that inflation risk, and as Treasury yields rise, mortgage rates follow. What looked like a promising spring buying season has turned into four straight weeks of rate increases.
For borrowers shopping right now, the 30-year conventional is running around 6.36%–6.38%, with 15-year rates near 5.73%. The week-over-week move of roughly 16 basis points on a $400,000 loan translates to about $44 more per month and roughly $15,800 in additional interest over 30 years — the breakeven math worth knowing when evaluating your timing. Rates are trending higher as long as the oil-driven inflation signal persists. You can see where today's numbers land for your specific scenario at netrate.mortgage.
The Federal Reserve held the funds rate steady at 3.50%–3.75% at the March 17-18 FOMC meeting. The next meeting is April 28-29. What's notable is the shift in market expectations: earlier this year, traders were pricing in two rate cuts. Today, markets see roughly a 50% chance of a rate increase by December — a dramatic reversal driven entirely by energy-related inflation fears. How the conflict in the Middle East evolves over the next few weeks will largely determine whether mortgage rates stabilize here or continue climbing into spring.
— David Burson, NetRate Mortgage