Overview
The average rate for the U.S. 30-year fixed mortgage climbed to 6.22% this week, marking the highest reading since early December, the mortgage finance agency Freddie Mac reported. That figure is up from 6.11% a week earlier. Market participants attributed the move to heightened inflation fears tied to the war in the Middle East, which lifted oil prices and pushed U.S. Treasury yields upward.
Recent movement and policy measures
Mortgage rates had previously fallen to 5.98% just before the U.S.-Israeli conflict with Iran began. The decline coincided with an order from President Donald Trump directing Freddie Mac and Fannie Mae to increase purchases of mortgage-backed securities. Those purchases initially helped bring down borrowing costs for homebuyers.
Why rates moved higher
Markets moved in the opposite direction as the geopolitical tensions fed concerns about rising energy prices and inflation. Higher oil prices coincided with a jump in yields on U.S. Treasuries - an important benchmark for mortgage rates. Because mortgage rates generally track the 10-year Treasury yield, upward movement in that yield translated into higher mortgage borrowing costs.
Implications for the housing market and politics
Sustained higher mortgage rates could weigh on home sales during the seasonally active spring months, reducing affordability for prospective buyers. Housing affordability has already emerged as a more prominent political issue as the country approaches the November midterm elections.
What remains uncertain
The persistence of elevated mortgage rates will depend on how long geopolitical pressures keep oil prices and Treasury yields elevated. The trajectory of those market forces will determine whether the recent rise in mortgage costs is temporary or a longer-lasting headwind for homebuyers and the real estate sector.