Mortgage rates jump sharply higher after Iran strikes, reversing last week's decline

2026-03-04 19:25:28

An aerial view of homes in San Francisco, Aug. 27, 2025.

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After falling below 6%, matching their lowest level in several years, mortgage rates reversed course Monday, hitting their highest point in two weeks.

The average rate on the popular 30-year fixed loan rose 13 basis points to 6.12%, according to Mortgage News Daily. It had fallen to a recent low of 5.99% on Feb. 23 and pretty much sat there all week.

The drop was welcome news as the all-important spring housing market gets underway. Potential buyers have been sidelined by high home prices and concerns over the broader economy. Mortgage rates crossing into the 5% range broke an emotional barrier for some, suggesting buyers might jump at the opportunity.

Mortgage rates loosely follow the yield on the U.S. 10-year Treasury, which rose back above 4% on Monday. The growing conflict with Iran caused a spike in oil prices, raising inflation worries and pushing yields higher.

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Oil prices, however, may not be what’s driving mortgage rates up, according to Matthew Graham, chief operating officer at Mortgage News Daily.

“In fact, versus the 3pm CME close on Friday, bonds were flat until 7am. By that time, oil had already experienced almost all its volatility for the day,” Graham said in emailed comments to CNBC. “The crux of the bond sell-off played out in a vacuum–STRONGLY suggesting Friday’s yields were dragged down by month-end buying and this morning’s selling is ‘new month’ positioning.”

This underscores the possibility that the bond market will view Monday’s move as a technical bounce at the 4% level in 10-year Treasurys, Graham said. This means it could be more challenging for rates to move lower without meaningful motivation from economic data, which there is plenty of this week, including the monthly employment report set for Friday.

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