Mortgage rates for a conventional 30-year fixed loan have risen to 6.46%, the highest since September 2025, according to Freddie Mac data released Thursday. This surge in rates coincides with the escalation of the conflict between the U.S., Israel, and Iran, which has increased inflation concerns and pushed up government bond yields.
Borrowing costs had briefly dipped below 6% in late February, but have since climbed sharply. The increases are closely linked to the 10-year Treasury bond yield, which rose from 3.96% before the U.S. and Israel attacked Iran on February 28 to 4.26% by April 2. Mortgage rates generally track this benchmark.
Mike Fratantoni, chief economist at the Mortgage Bankers Association, explained that rising inflation prompts investors in mortgage-backed securities to demand higher returns, pushing mortgage rates upward. At the same time, persistent inflation above the Federal Reserve’s 2% target is leading economists to expect that the central bank will keep benchmark interest rates steady throughout 2026, further sustaining elevated mortgage rates.
Impact on Homebuyers
The increase in mortgage rates is significantly affecting prospective buyers. Devan Post, a Minnesota resident searching for a larger home, initially received a mortgage quote of 5.85% in February. Due to the conflict and resulting rate hikes, her latest quote jumped to 6.49%, adding about $265 to her monthly payment and nearly $95,400 over the life of a 30-year loan on a 20% down payment.
Rachel Marks, a Brooklyn home seeker, expressed frustration over rising costs, saying the market conditions initially appeared favorable but have soured as rates climbed.
Spring Housing Market Outlook
Rising mortgage rates arrived just as the spring homebuying season typically gains momentum. Prior to the spike, experts predicted a strong market fueled by modest inventory increases, new construction, and lower year-over-year listing prices. Economist Jake Krimmel of Realtor.com noted that 2026 was expected to see improved affordability compared to 2025.
However, the Iran war’s impact on inflation and interest rates has unsettled the market. Oxford Economics warned the conflict may lead many buyers and sellers to pause their plans. Reflecting this, the Mortgage Bankers Association recently downgraded its 2026 home sales growth forecast from an 8% increase to 5% compared to 2025.
Despite some early signs of weaker demand, such as a 3% drop in the MBA’s mortgage application purchase index on April 1, Krimmel said it is too soon to conclude that the market is cooling significantly. In some cases, rising rates may accelerate buying decisions as people try to lock in current prices before costs rise further.
Why it matters
The surge in mortgage rates amid geopolitical tensions has a direct impact on housing affordability and the broader economy. As borrowing costs rise, fewer buyers may qualify for loans or may be forced to purchase less expensive homes, affecting housing demand and potentially slowing economic growth related to real estate activity. The Federal Reserve’s monetary policy stance and inflation outlook will continue to play critical roles in mortgage market dynamics throughout 2026.
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