For the first time in years, home buyers were starting to feel something like optimism. Then oil spiked.
The 30-year fixed mortgage rate sat at 6% as of Freddie Mac's March 5 report, up slightly from the prior week. In the days since, daily rate trackers have shown continued upward pressure, with some lenders pushing above 6% on purchase loans.
That's a reversal from the trend that had been building since mid-2025. Rates peaked above 7% in early 2025 and had been grinding lower for months, touching 5.98% — levels not seen since 2022. Purchase and refinance applications had both been rising year over year.
The Iran war ended that momentum.
Mortgage rates don't follow the Fed directly — they track the 10-year Treasury yield, which moves with inflation expectations. When oil prices surged after U.S. and Israeli strikes on Iran, bond investors started pricing in more inflation, pushing yields up and pulling mortgage rates with them.
Erica Adelberg, chief MBS strategist at Bloomberg Intelligence, put it plainly: the war has "created a lot more uncertainty around the timing of future Fed rate cuts," which directly affects how lenders price long-term loans.
The first Fed cut is now expected no earlier than July.
The lock-in effect is still the biggest drag on housing supply. Millions of homeowners who refinanced at 3% during the pandemic have no incentive to sell — they'd have to take on a new mortgage at roughly double that rate. Most economists think rates would need to fall closer to 5% before that logjam meaningfully breaks.
At 6%, buying a home is more affordable than it was a year ago. But the window that was quietly opening over the past few months just got a little narrower.