Mortgage rates climb for the fourth week in a row - and they won't drop back down until this happens

Andrew Keshner

Rates had fallen under 6% for the first time since 2022 just days before the start of Operation Epic Fury

Mortgage rates are up, but they are still lower than they were a year ago.

Mortgage rates climbed for a fourth straight week following the start of U.S. and Israeli strikes against Iran, and they are now touching levels last seen in September.

The average 30-year mortgage rate was 6.38%, Freddie Mac (FMCC) said Thursday, a rise from 6.22% last week.

That's still lower than a year ago at this time, when the 30-year fixed-rate mortgage averaged 6.65%.

"The housing market continues to show gradual improvements compared to a year ago amid recent rate volatility," said Sam Khater, Freddie Mac's chief economist.

Lending rates dipped under 6% for the first time since 2022 just days before the start of Operation Epic Fury, but they have since climbed on the back of bond-market worries about oil-price shocks and higher inflation.

Will mortgage rates retreat after the Iran war is over? Yes, said Michael Fratantoni, chief economist at the Mortgage Bankers Association - but "not quickly and not very much."

Whenever the fighting ends, Fratantoni said, lingering questions will include what damage has been done to the world's oil supply, how that plays into inflation and what the bond market will make of it.

Mortgage rates tend to follow the yield on the 10-year Treasury note.

The Federal Reserve is only penciling in one potential interest-rate cut in 2026, citing uncertainty in the Middle East as a reason to go slow. The Fed kept its benchmark rate steady last week.

The central bank doesn't set mortgage rates, but its rate policy can influence the direction of 10-year Treasury yields BX:TMUBMUSD10Y.

Before the start of the Iran conflict, Fratantoni and others had predicted that rates would hover in a range of 6% to 6.5% in 2026. Now rates are at the top end of that range, and Fratantoni said it's possible they could break out above that range if the situation in the Middle East worsens.

There's "tremendous, unbelievable uncertainty. That's where we head from here," he said. So far, the higher rates have softened but not squelched buyer demand in the spring home-buying season, he noted.

Now read: Leading home builder says the Iran war is already hurting housing market

Mortgage rates could possibly decline after the Iran war is over, said Daryl Fairweather, chief economist at Redfin . But it wouldn't be overnight and not for the reason that people would think, she said.

"The end of a war could ease some pressure on inflation, but mortgage rates don't respond to peace headlines; they respond to whether inflation is actually coming down in a sustained way," she told MarketWatch.

What happens with rates ultimately depends on inflation, energy prices and the bond market's reaction, she said.

"The war matters only to the extent that it moves those variables-especially inflation expectations, which ultimately anchor mortgage rates.

The toll of high-priced oil for the economy is a growing focus for investors. Fairweather linked it back to mortgage rates and the housing market. "There's also a more pessimistic scenario where the war contributes to a global recession," Fairweather said. "This could bring rates down, but that downside would affect the broader economy, not just mortgages."

It's unclear what's next for the region. This week, President Donald Trump announced a five-day pause in U.S. attacks in order to hold talks with Iranian leaders. The Trump administration has floated a proposal to end the war, but Iran has rejected it. Iranian negotiators "better get serious soon," Trump wrote Thursday on Truth Social.

At a cabinet meeting Thursday, Trump sounded in no rush to make a deal. "I'm the opposite of desperate," he said. "In fact, we have other targets we want to hit before we leave."

Victor Reklaitis contributed to this report

-Andrew Keshner

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03-27-26 0931ET