Escalating tensions between the United States and Iran have rippled through global financial markets, pushing average rates for 30-year fixed mortgages up to 6.11 per cent in the week ending 12 March.
Freddie Mac’s weekly lender survey, released Thursday, highlighted this as the steepest climb since April 2025, when President Trump’s Liberation Day tariffs sparked a bond yield spike.
The reversal erases recent progress that had briefly lifted spirits among homebuyers. Only a fortnight ago, rates dipped below the psychologically crucial six per cent threshold for the first time since 2022, making monthly payments more palatable and drawing cautious purchasers back to the market.
February saw existing-home sales rise 1.7 per cent, according to National Association of Realtors data, amid a persistent shortage of properties and median prices hovering around $320,000.
Fuelled by U.S.-Israeli strikes on Iranian targets earlier this month under Operation Epic Fury, the 10-year Treasury yield, a key mortgage rate indicator, jumped to 4.25 per cent on Thursday—its highest since early February.
These attacks have disrupted Persian Gulf oil supplies, propelling Brent crude above $95 a barrel—the peak in 18 months, per Bloomberg. Reuters details shipping interruptions and production halts, fuelling inflation concerns and hindering Federal Reserve rate cut plans.
Trump piled on Thursday, calling out Fed Chair Jerome Powell. “Where is the Federal Reserve Chairman, Jerome “Too Late” Powell, today? He should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting!”
“Without the geopolitical tensions, we would likely be seeing a 10-year Treasury well south of 4 per cent, with mortgage rates in the high 5s,” noted Jeff DerGurahian, chief investment officer at loanDepot. “All of this hinges on the price of oil.”
He added, “If the conflict in the Middle East drags on and oil prices remain high, the Federal Reserve will err on the side of caution.”
With spring buying season imminent, the outlook darkens. “The outlook for the spring homebuying season has become cloudier than it was even just a month ago,” warned BrightMLS chief economist Lisa Sturtevant. A drawn-out clash risks stalling sales, per NAR’s Lawrence Yun, as Mortgage Bankers Association data shows applications already slipping 2.3 per cent.