Mortgage rates hit 6% as Iran war spooks bond market traders
In an aerial view
By Samantha Delouya, CNN
(CNN) — US mortgage rates didn’t stay below 6% for long.
The average 30-year fixed mortgage was 6% for the week ending March 5, according to Freddie Mac – after war with Iran rattles financial markets.
The yield on the 10-year Treasury, which mortgage rates closely follow, has climbed since President Donald Trump and Israel launched military strikes in Iran on Saturday. While US government bonds are typically seen as a safe haven during periods of turmoil, pushing yields lower as investors pile in, this time yields have moved in the opposite direction.
Last week, mortgage rates dipped to 5.98% — the first time they’ve fallen below 6% since 2022 — crossing what some economists describe as a key psychological threshold that could help revive America’s frozen housing market.
While the move higher in mortgage rates was relatively small this week, a prolonged conflict in the Middle East could cause a broader bond sell-off. Combined with sustained inflation pressure from rising oil prices, that could disrupt the recent downward trend in mortgage rates.
Despite this week’s increase, mortgage rates remain significantly lower than at the start of 2025, when they briefly climbed above 7%.
Many homeowners who locked in ultra-low borrowing costs during the early years of the pandemic have been reluctant to sell and take on significantly higher rates, limiting the number of homes for sale and keeping prices elevated. Some experts had said a mortgage rate starting with a “5” could begin to ease the so-called lock-in effect and coax more sellers into the market.
“Mortgage rates briefly fell below 6% before an oil shock reversed them. Even so, affordability gains over the past year remain largely intact. Buying power is up about $30,000 compared to this time last year, as mortgage rates fell from the high 6% range to the low 6% range,” said Zillow senior economist Kara Ng. “Households that did not buy or refinance a home during the mortgage rate dip might have missed a flash sale, but can still buy at a discount.”
But lower rates haven’t yet translated into a hotter housing market. The National Association of Realtors reported that home sales fell 8.4% in January – and that home sales decreased in all regions of the US.
Despite the sluggish pace of sales, home prices have kept climbing. NAR also reported that median existing home sales price rose for the 31st consecutive month in January.
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