Iran war hits housing market as mortgage rates rise to 6% on inflation fears

Mortgage rates are on the rise once again as fears of inflation resurface in light of the ongoing conflict in Iran. According to Freddie Mac’s latest data, the average national rate for a 30-year fixed-rate mortgage has crept up to 6%, a slight increase from last week’s 5.98% and the lowest it has been since September 2022. While still significantly lower than rates a year ago, which exceeded 6.6%, experts caution that even a small jump to 6% could dissuade potential homebuyers.

Kate Wood, a lending expert at NerdWallet, noted that while a mere two-hundredths of a percentage point may not seem significant, the psychological impact of crossing the 6% threshold could sway buyers’ decisions. The increase in mortgage rates is closely tied to movements in the bond market, particularly the 10-year Treasury note. The conflict in Iran has led to a spike in global oil prices, fueling concerns about inflation in the U.S. This, in turn, has driven up bond yields as investors seek higher returns.

The 10-year Treasury note rose to 4.14% on Thursday, up from 3.96% just days prior to the military actions in Iran. The disruption in oil supplies has also caused gas prices to soar, with U.S. gasoline prices climbing 26 cents per gallon in the past week. The average cost of a gallon of regular gas now stands at $3.25, the highest level since April 2025.

Inflationary pressures extend beyond the bond market and could influence the Federal Reserve’s interest rate decisions. Higher consumer prices may deter the Fed from lowering its benchmark rate or prompt it to consider rate hikes, which could impact the broader lending environment. Wood suggested that if the disruption in oil supplies continues to drive inflation, mortgage rates could see further increases in the coming weeks.

As the situation unfolds, it remains uncertain how the conflict in Iran will continue to impact global markets and mortgage rates. Stay tuned for updates on this developing story.

This article was edited by Alain Sherter.