Mortgage Rates Jump After Iran Conflict – What Homebuyers Need to Know
Mortgage rates reversed course Monday, climbing back above 6% as geopolitical tensions escalated following strikes in Iran. The jump reflects growing concerns about potential inflation driven by rising oil prices and a shift in investor sentiment away from typically safe-haven assets like U.S. Treasury bonds.
The average 30-year fixed mortgage rate rose 13 basis points to 6.12%, according to Mortgage News Daily, pulling rates off recent 3.5-year lows. This increase comes after a period of relative stability, and represents a notable shift for prospective homebuyers who had begun to see rates moderate.
Oil Prices and the Treasury Yield Curve
The immediate catalyst for the rate increase appears to be the impact of the strikes on oil markets. Crude oil prices surged nearly 6% to $71 a barrel midday Monday, fueled by fears of supply disruptions in the Middle East. This spike in energy costs directly impacts inflation expectations, prompting investors to reassess their holdings.
Traditionally, during times of global uncertainty, investors flock to U.S. Treasury bonds as a safe haven, driving up bond prices and pushing down yields. Lower Treasury yields typically translate to lower mortgage rates. However, the current situation has played out differently. Instead of buying Treasuries, investors have been selling them, anticipating higher inflation and seeking alternative assets like gold. The yield on the 10-year Treasury rose more than 11 basis points to 4.05%.
“It’s never fun to see that,” remarked Jimmy Vercellino, a mortgage loan originator in Phoenix, reflecting the disappointment among borrowers who had hoped for continued rate declines.
Historical Patterns and Potential Volatility
While the immediate reaction is concerning for potential homebuyers, historical precedent suggests this increase may not be sustained. Similar geopolitical events – including the 2003 Iraq War, the 2020 killing of Iranian General Qasem Soleimani, and the 2023 Gaza War – were initially followed by spikes in mortgage rates, but ultimately led to lower rates as situations stabilized. However, these events were typically followed by a period of volatility first.
As Vercellino noted, “When you seem back at conflict, typically when wars start, we do see a reduction in rates. However, in the interim, what we see is an initial spike in rates and oil.”
Current Mortgage Rate Landscape
As of today, March 2, 2026, here’s a snapshot of average mortgage rates, according to Zillow data:
- 30-year fixed: 5.81%
- 20-year fixed: 5.76%
- 15-year fixed: 5.32%
- 5/1 ARM: 5.82%
- 7/1 ARM: 5.88%
- 30-year VA: 5.41%
- 15-year VA: 5.04%
- 5/1 VA: 5.01%
These figures represent national averages and are rounded to the nearest hundredth. It’s important to remember that individual rates will vary based on creditworthiness, down payment size, and other factors.
Refinance Rate Trends
Refinance rates are also on the move. Current national averages, as reported by Zillow, are:
- 30-year fixed: 5.85%
- 20-year fixed: 5.68%
- 15-year fixed: 5.42%
- 5/1 ARM: 5.89%
- 7/1 ARM: 5.80%
- 30-year VA: 5.40%
- 15-year VA: 5.08%
- 5/1 VA: 4.75%
Refinance rates are often higher than purchase rates, though this isn’t always the case. Borrowers considering a refinance should carefully compare offers from multiple lenders.
Understanding Adjustable-Rate Mortgages
Adjustable-rate mortgages (ARMs) offer an initial period of fixed interest rates before adjusting periodically. For example, a 5/1 ARM maintains a fixed rate for the first five years, then adjusts annually. ARMs typically start with lower rates than fixed-rate mortgages, but carry the risk of increasing payments if interest rates rise. They can be a viable option for borrowers who plan to sell their home before the adjustment period begins.
Recently, ARM rates have been comparable to, or even higher than, fixed rates, making it crucial for borrowers to carefully weigh the pros and cons before choosing an ARM.
Factors Influencing Mortgage Rates
Beyond geopolitical events, mortgage rates are fundamentally influenced by the overall health of the U.S. Economy, inflation trends, and investor demand for mortgage-backed securities. Lenders typically offer the lowest mortgage rates to borrowers with strong credit scores, substantial down payments, and manageable debt-to-income ratios.
Borrowers can also explore options like paying discount points at closing to lower their interest rate, or opting for a temporary rate buydown. However, these strategies require careful consideration to determine if the upfront costs are justified by the long-term savings.
Looking Ahead
The Mortgage Bankers Association (MBA) had previously forecast a 30-year mortgage rate near 6.10% through the finish of 2026, while Fannie Mae also predicted a rate around 6%. The recent spike above 6% introduces uncertainty into these forecasts.
Investors are also awaiting key economic data releases later this week – including the February jobs report, January retail sales, and manufacturing data – which could provide further clues about the Federal Reserve’s future monetary policy decisions. The Fed’s actions will ultimately play a significant role in shaping the trajectory of mortgage rates in the coming months. Treasury yields will continue to be a key indicator to watch.
For those considering a home purchase or refinance, staying informed about market developments and shopping around for the best rates will be crucial in navigating this evolving landscape.