Mortgage Rates Now Closer To 7% Than 6% As The Iran War Escalates

Two weeks ago on CNBC, I talked about how the housing market was poised for growth for the first time in years — unless mortgage rates shot up due to the war with Iran.

Mortgage rates were sub 6% before the war and today they hit 6.62%, according to Mortgage News Daily. That is a big move. It’s unfortunately the kind of move that the housing market has grown accustomed to over the past few years, but this year we had the best backdrop to keep rates lower for longer than we have seen since rates rose in 2022.

At the start of the year, we had a softer labor market, better mortgage spreads and many rate cuts in the system. Even the last jobs report was negative, down almost 100,000 jobs. Given that backdrop, it would take a lot to move mortgage rates higher in such a fast fashion. Well, the escalation of the conflict in Iran did that.
 
The 10-year yield made another leg higher today as President Trump gave an update on the conflict, which didn’t sound promising for a quick fix. While that was going on, rates made another negative move higher along with oil prices. I discussed wartime economics and how to make sense of it all in today’s episode of the HousingWire Daily podcast.

So, how should we think about the housing market with rates moving so much, so fast in March?

Housing demand was fine before the war!

Housing demand was running very smoothly this year, having its best start in years, even with the snow events. We saw multi-year highs in purchase apps and in our weekly pending home sales.

Purchase application data has been positive year over year for every week this year, but last week we saw a hit in demand: week-to-week data declined 5%, and year-over-year growth slowed from 12% to 5%.

Our weekly pending sales data, which will be updated over the weekend in the Housing Market Tracker, was coasting with growth for a long time once we got the snow data out of it, just growth, growth and growth all over the data pool. We will see this weekend how that’s been impacted.

Conclusion

It’s a very frustrating reality that the war has changed mortgage rates so quickly in March. For those in the mortgage and real estate industries who had rates under 6.25% with no volatility, seeing rates move with every headline makes the process of locking rates and getting people in homes much more difficult.

Hopefully, we will get some closure soon because things can get a lot worse with this conflict and rates can go higher, as we still have some legroom to reach my peak forecast of 4.60% on the 10-year yield. On tomorrow’s podcast Editor in Chief Sarah Wheeler and I discuss the best and worst outcomes for housing in 2026 due to the escalating conflict.