US 30-year mortgage rates rise as Iran conflict persists

Mortgage rates on 30-year fixed-rate mortgages in the United States have risen for five straight weeks, creating a tougher environment for would-be homebuyers this spring. Freddie Mac reported that the average rate on a 30-year loan increased to 6.46% for the week, the highest level in seven months, up from 6.38% a week earlier.

Rates rise for a fifth consecutive week

Freddie Mac’s data shows the 30-year fixed rate has moved higher steadily, following a period when rates were lower earlier this year. Before the U.S. and Israel attack on Iran, the 30-year fixed rate averaged 5.98% in late February.

The increase comes as financial markets react to the ongoing U.S. conflict with Iran, which has contributed to higher borrowing costs compared with the start of the year.

War-driven bond volatility could affect spring home sales

Kara Ng, a senior economist at Zillow Home Loans, said the “rate shock”—driven by bond-market volatility tied to the war—could slow real estate transactions during the spring season. In the U.S., the spring market typically runs from March through May and is usually the most active period.

Ng said the housing market’s trajectory depends on how quickly the conflict ends. If the conflict ends early, the market could recover in time for the peak home-buying season. If the war lasts longer, many buyers may delay plans until next year.

Mortgage demand cools as rates climb

The Mortgage Bankers Association (MBA) reported that mortgage applications fell 3% in the previous week, while refinances dropped 17%. Higher rates have made borrowing to buy a home substantially more expensive.

For example, on a $450,000 home with a 20% down payment, a borrower locking in a 30-year mortgage rate in February would save about $1,346 per year compared with a borrower this week. Over the life of the loan, the savings could total as much as $40,000.

Link to Treasury yields and energy-driven inflation concerns

Mortgage rates typically move in tandem with the U.S. 10-year Treasury yield, which has risen sharply from pre-war Gulf War levels as oil prices climbed and renewed concerns that the Federal Reserve may keep rates higher for longer.

Gasoline prices have also moved higher: the national average price of regular gasoline recently topped $4 per gallon for the first time since 2022. WTI crude futures settled the week at just over $111 per barrel, the highest in nearly four years.

In the rate futures market, pricing reflects a scenario in which the Fed does not cut rates in 2026. The 10-year Treasury yield ended the week near 4.35%, up from below 4% before the conflict.

Powell signals the Fed may wait for clearer economic impact

In remarks at Harvard University earlier this week, Fed Chair Jerome Powell indicated the central bank could hold rates steady while assessing the economic impact of the global energy shock triggered by the war. Powell said the conflict places the U.S. economy at risk of stagflation—slower growth and higher inflation—making the outlook for Fed policy more uncertain than ever.

When asked about the impact of oil-price volatility on rates, Powell said, “There will come a time when we must address what to do. For now, not yet, because we do not know what the economic impact will be.”