Why current mortgage rates climbed this week

The average current mortgage rates for a standard 30-year fixed loan rose to 6.11% in the week ending March 12, according to a lender survey by Freddie Mac released Thursday. That increase marked the largest weekly jump since April, reversing some of the recent relief borrowers felt when rates dipped below 6% just two weeks earlier.

President Donald Trump’s war with Iran has rattled investors, pushing yields higher and making it harder for the Federal Reserve to justify near-term rate cuts. The yield on the 10-year U.S. Treasury — which mortgage interest rates tend to follow — climbed to 4.25%, feeding directly into mortgage lenders’ pricing.

How the 30 year mortgage rate links to Treasury yields and oil

Mortgage lenders base rates largely on investor demand for longer-term Treasuries. When investors sell bonds, yields rise, and lenders pass those costs to borrowers. The recent spike in oil and gas prices after the attacks on Iran has amplified market nervousness.

• The 10-year U.S. Treasury yield rose sharply as the conflict escalated.
• Higher oil prices and inflation fears are prompting investors to sell bonds, lifting yields that influence the 30 year mortgage rate.
• Lenders reacted quickly: the weekly survey showed the standard 30-year fixed mortgage average at 6.11%.

What this means for homebuyers and mortgage refinance rates

For buyers, the jump in current mortgage rates raises monthly payments and reduces purchasing power. Refinance rates have also moved higher, reducing opportunities for homeowners who hoped to lower payments.

• A homebuyer who was tracking sub-6% offers may now face higher monthly costs.
• Mortgage refinance rates are less attractive when long-term rates spike, slowing refinance activity.
• The spring home-shopping season could be blunted if rates stay elevated.

Expert take: “It all hinges on the price of oil”

Jeff Jeff DerGurahian, chief investment officer and head economist at loanDepot, told clients that without the geopolitical tensions, the 10-year Treasury would likely be below 4% and mortgage rates “in the high 5s.” He warned that a protracted conflict and sustained high oil prices would lead the Federal Reserve to be cautious about cutting rates, keeping mortgage interest rates elevated.

Spring market risks: inventories, prices and buyer sentiment

The housing market entered spring already strained by high home prices and limited supply. Lower rates in recent months had coaxed some buyers back, and existing-home sales rose 1.7% in February, according to National Association of Realtors. But higher borrowing costs threaten to reverse that momentum.

Lawrence Lawrence Yun and other analysts said the outlook for the spring season is now cloudier: if the conflict is limited, demand could rebound; if it drags on, the market may stall.

Housing outlook from other economists

Lisa Lisa Sturtevant of BrightMLS cautioned that prolonged tensions could keep buyers on the sidelines. Market watchers say the key variables to watch are the course of the Middle East conflict, oil prices, and whether Treasury yields ease.

What borrowers should watch next

• Movement in the 10-year Treasury yield and any signs of easing in bond markets.
• Oil-price trends and reports on the duration of the conflict.
• Announcements from lenders tying mortgage rates and mortgage refinance rates to shifting yields.
• The pace of home-sales activity in the coming weeks as the spring season unfolds.

The current jump in mortgage rates underscores how fast macro events can change the cost of buying or refinancing a home. Homebuyers and homeowners weighing refinance rates should monitor lender pricing closely and prepare for higher monthly payments if rates remain elevated.

Follow TNN for continuing updates on current mortgage rates. Follow TNN for the latest on current mortgage rates, US news today and Canada news today.

About The Author