Mortgage rates are surging, foiling homebuyers’ best-laid plans

The surge in mortgage rates is posing a threat to the spring homebuying season, with borrowing costs reaching their highest level since September 2025. According to Freddie Mac, the rate on a conventional 30-year home loan has risen to 6.46%, after dipping below 6% in late February. The ongoing Iran war is further fueling inflation concerns and driving up government bond yields, which in turn affects mortgage rates that tend to track the 10-year Treasury bond.

Aspiring homeowners like Rachel Marks, a resident of Brooklyn, New York, are feeling the impact of the rising borrowing costs. Marks, who recently started searching for a home, expressed frustration at the continuous increase in prices. The 10-year Treasury yield has also climbed to 4.26% as of Thursday, up from 3.96% before the Iran war began.

Economists, including Mike Fratantoni from the Mortgage Bankers Association, attribute the rise in mortgage rates to investors demanding higher returns to offset the increase in inflation. The direction of monetary policy is also a factor, with expectations that the Federal Reserve will refrain from lowering its benchmark rate due to inflation staying above the 2% target.

Prospective homebuyers like Devan Post in Minnesota are facing unexpected challenges due to the jump in mortgage rates. Post initially received a rate of 5.85% for a 30-year fixed-rate mortgage but saw it increase to 6.49% after the Iran war. If she and her husband proceed with the higher rate, they would pay an additional $265 per month, totaling $84,600 over a 30-year loan.

The housing market was anticipating a strong spring season with increased inventory and lower listing prices. However, the spike in mortgage rates has created uncertainty, leading to a potential slowdown in demand. The Mortgage Bankers Association has revised its outlook for home sales, expecting softer demand in light of the higher rates.

While it is too early to determine the full impact of the rising mortgage rates on the housing market, some indicators suggest a slight slowdown in demand. The MBA’s purchase index, which tracks mortgage loan applications, fell by 3% on April 1 from the previous week. Despite these challenges, experts are monitoring the situation closely to assess the market’s response to the changing financial landscape.

Overall, the increase in mortgage rates is reshaping the dynamics of the spring homebuying season, with buyers and sellers navigating a more complex and uncertain market environment.