US Market | Rising Yields, Rising Costs: War pushes US mortgage rates higher

Rising geopolitical tensions in the Middle East are beginning to ripple through the U.S. housing market, pushing mortgage rates to their highest level in three months and complicating efforts to improve affordability.

According to Reuters, the average rate on the benchmark 30-year fixed-rate mortgage climbed to 6.22% this week from 6.11% a week earlier, citing data from mortgage finance agency Freddie Mac. This marks the highest level since early December and reflects a sharp reversal from the brief dip seen just before the outbreak of the U.S.-Israeli conflict with Iran.

Mortgage rates had eased to 5.98% on the eve of the conflict, supported in part by policy direction aimed at boosting liquidity in housing finance. However, the escalation in hostilities has since triggered a surge in oil prices and a corresponding rise in U.S. Treasury yields, which mortgage rates tend to track—particularly the 10-year benchmark closely.


The increase in borrowing costs comes at a sensitive time for the housing market. The spring season is typically the busiest period for home sales in the United States, but persistently higher mortgage rates could dampen buyer demand and slow transaction activity. It sustained upward pressure on rates may act as a headwind for both prospective buyers and sellers.

The development also carries political implications. Housing affordability has emerged as a key concern for policymakers and voters alike, especially in the run-up to the U.S. midterm elections. It also highlighted that rising financing costs could undermine ongoing efforts to make homeownership more accessible, adding another layer of complexity to the broader economic landscape shaped by geopolitical uncertainty.