Just days ago, American homebuyers felt relief for the first time in years. Mortgage rates finished last week at 5.99%, while the 10-year Treasury reached a low not seen since 2026. This was a strong psychological milestone. For many potential homebuyers in the U.S., the drop in rates below 6% for the first time since 2022 is a big deal. This is especially true with the spring selling season coming up.
That window slammed shut almost immediately.
Mortgage rates changed direction fast. They fell below 6%, which is the lowest in years. They reached their highest point in two weeks. The average rate for the popular 30-year fixed loan went up by 13 basis points. It now stands at 6.12%, according to Mortgage News Daily.
The culprit? The escalating U.S.-Iran conflict.
What’s Driving Rates Up
The rising conflict with Iran led to a spike in oil prices. This raised inflation worries and pushed Treasury yields higher. Mortgage rates usually follow the yield on the U.S. 10-year Treasury, which went above 4% due to the conflict.
Higher oil prices can increase other costs, like shipping, production, and travel. This raises inflation expectations. In the bond market, investors seek higher yields to lend money. This, in turn, raises mortgage rates.
Mortgage rates often move with the bond market, especially the 10-year Treasury note. The conflict in Iran is driving up global oil prices. This raises inflation fears in the U.S. As a result, bond yields go up. Investors want higher returns.
By Thursday, March 5, the average rate for 30-year fixed loans rose to 6%. It was 5.98% the week before, the lowest since September 2022, according to Freddie Mac data. A year ago, the rate was 6.63%.
The Psychology of the 6% Barrier
Numbers matter — but so do feelings. “Two hundredths of a percentage point is not making or breaking anyone’s ability to buy a home,” said Kate Wood, a lending expert at NerdWallet. “But psychologically… this feels huge.”
Last week’s decline had offered a psychological boost for Americans who may have been holding off on housing decisions for years. The new increase might surprise some, but rates are still much lower than last year. This gives house hunters more buying power and creates hope for a better spring sales season.
Two Forces Pulling in Opposite Directions
Economists are quick to note that war doesn’t always push mortgage rates in a single direction. Redfin chief economist Daryl Fairweather cautioned that you can’t always know in advance whether the effect will be negative or positive. “Fear of rising oil prices can push rates up. “But worries about global stability and economic growth often lower rates,” she said. “These concerns can pull rates down.”
Global uncertainty might lead investors to find safety in financial markets. This could lower 10-year U.S. Treasury bond rates and soften mortgage rates.
For now, however, the inflation-fear narrative is winning. Susan Wachter, a professor of real estate at the University of Pennsylvania’s Wharton School, noted: “A key price for the inflation rate is oil. If oil markets are destabilized, as they are right now, and if oil prices significantly increase, this is clearly going to raise the inflation rate.”
What Experts Are Watching
As long as there’s a quick resolution, economists say borrowing costs aren’t likely to rise enough to spoil the spring selling momentum. A lengthy conflict, however, would push up oil prices and generate higher inflation, keeping upward pressure on Treasury yields that guide home loans.
Mark Zandi, chief economist of Moody’s Analytics, said the most likely scenario points to a quick resolution in the Middle East — but if the war drags on for more than a few weeks, “oil prices and interest rates will be higher, weighing heavily on the psyche of American households who are already on high alert over the cost of living.”
Bright MLS Chief Economist Lisa Sturtevant outlined two possible paths: “If the conflict is limited in duration and scope, higher energy prices, bond yields, and mortgage rates could all be temporary. The beginning of the spring homebuying season could be delayed as buyers wait for mortgage rates to settle back down, but sales would likely rebound, with prices remaining solid.”
Spring Housing Season on the Line
The timing is very delicate. Before the bombings in the Middle East, the U.S. housing market seemed set for a strong spring buying season. Price growth had slowed, inventory was rising, and mortgage rates were falling. This led to more optimism among real estate agents.
Realtor senior economist Joel Berner said higher rates can cause a lock-in effect. This means people may stay in their homes longer. This makes it hard for people to move. Worry about the future keeps potential sellers from listing their homes. They hesitate because they’re uncertain. He said the economy and housing market are uncertain. This might hold back the home-selling season.
Fannie Mae’s February 2026 Housing Forecast predicts that rates will sit at 6% for most of 2026 and 2027 — a forecast now facing a new wild card.
The Bigger Picture for Buyers
The median monthly housing payment was $2,591 during the four weeks ending March 1, down 2.8% year over year. Payments are falling largely thanks to the weekly average mortgage rate dropping to 5.98% last week — the first time it has dipped below 6% in three and a half years.
Mike Simonsen, chief economist at Compass, offered a grounded perspective: “All we can do is evaluate the opportunity in front of us. Do we love the home? Can we afford the home? If so, that’s a good signal to buy the home rather than waiting for some condition that might happen later.”
