- U.S. mortgage rates rise to 6.38% amid Middle East conflict
- Rates increase for fourth consecutive week, highest since September
- Rising bond yields and energy prices drive borrowing costs higher
- War-linked inflation fears weigh on housing demand and construction
U.S. mortgage rates rose to 6.38 percent in the week ending March 26, marking a fourth consecutive increase as the Iran conflict drives inflation concerns and higher bond yields. The rise follows a brief period of declining rates in February that had improved housing affordability. The shift is expected to weigh on home sales and construction activity in the coming months.
Mortgage rates in the United States climbed for the fourth straight week as the Middle East conflict continued to ripple through financial markets and housing demand.
The average rate on a 30-year fixed mortgage rose to 6.38 percent, up from 6.22 percent a week earlier, according to Freddie Mac.
The increase marks the highest borrowing cost since early September and reverses a downward trend seen in February, when rates briefly fell below 6 percent and improved affordability for prospective buyers.
Bond Yields And Inflation Fears Drive Rate Increases
Mortgage rates closely track the yield on the 10-year U.S. Treasury note, which has risen sharply as investors respond to heightened geopolitical uncertainty.
The 10-year yield climbed to 4.38 percent, up from just under 4 percent before the conflict intensified, reflecting expectations of sustained inflation pressures.
Rising energy prices linked to disruptions in Middle East supply chains have contributed to these expectations, reinforcing upward pressure on both bond yields and borrowing costs.
The Organisation for Economic Co-operation and Development said the conflict could push U.S. inflation to 4.2 percent this year, more than one percentage point higher than its earlier forecast.
Higher inflation reduces the likelihood that the Federal Reserve will cut interest rates in the near term, a factor that feeds directly into elevated mortgage rates.
Housing Demand And Construction Outlook Weakens
The rise in borrowing costs is expected to dampen demand in a housing market already strained by elevated home prices and limited inventory.
President Donald Trump said Iran may be open to ceasefire negotiations, though Iranian officials have publicly rejected that claim, leaving uncertainty unresolved.
Economic forecasts suggest prolonged conflict could further weaken housing activity. Oxford Economics said higher mortgage rates and softer labor market conditions are likely to weigh on residential spending this year.
"Unless the war is brought to a quick end, higher mortgage rates and softer labor market conditions will weigh on residential spending this year," said Nancy Vanden Houten, the firm's lead U.S. economist.
The shift marks a reversal from earlier expectations that falling rates would help revive homebuying activity in 2026.
