Mortgage Rates Climb Back to 6% as Iran War Rattles Bond Markets

Mortgage rates are climbing back up after falling below 6%, as global tensions linked to the Iran war continue to rise. After dipping to 5.98% last week after sliding for three consecutive weeks, it today again hit the 6% mark.

The 5.98% mortgage rate mark was one of the lowest since 2022, offering relief to homebuyers. If the trend reverses and it climbs up due to the ongoing conflict, homebuyers are looking at a weaker market.

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How Mortgage Rates Today React to Iran War and Bond Market Shifts

The ongoing conflict in the Middle East is driving oil prices higher. There are also concerns about inflation, with the 10-year Treasury Yield now standing at 4.13%. It last closed at 3.96% on Feb 27. The 10-year Treasury yield is one of the major factors behind mortgage rates.

That’s the mortgage rates Iran war effect. Higher oil prices translate into more chances of inflation, which affects the treasury yield, and as a result, the mortgage rates chart starts to climb.

Speaking about the rising rate, Joel Berner, senior economist at the Realtor, told the Daily Democrat,

“For rates to continue their descent in 2026, we will need clear signals in the months to come that this conflict is not driving up prices for consumers at home. Given the major jump in oil prices this week and the increased shipping costs that go with that, this positive news on inflation may be hard to come by.”

Despite the recent increase, some economists note that mortgage rates remain significantly lower than last year’s levels, when they consistently hovered above 6%.

Amongst them, the chief economist at Freddie Mac, Sam Khater, said,

“Mortgage rates held steady at 6% this week, hovering near their lowest level since 2022. In fact, rates are down nearly a full percentage point from this time in 2024, spurring activity from buyers, sellers, and owners. As a result, refinance activity is up, and purchase applications are ahead of last year’s pace.”

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If energy prices stabilize and inflation remains at normal levels, the market may settle down, and bond market mortgage rates might continue their downward trend. For now, the conflict has entered its seventh day, with no signs of peace.