In the ever-changing world of mortgage rates, the small spike we saw last week appears to be holding for now. The Fed’s refusal to lower rates comes amid rising concerns about inflation, driven by increasing oil prices. If the war in Iran continues for an extended period, higher energy prices will likely lead to a sharp rise in inflation. However, if the conflict winds down soon, oil prices may ease, reducing inflationary pressure and potentially bringing lower mortgage rates. Time will tell how mortgage rates develop over the rest of the year.
The good news is that, at this time, mortgage rates remain about half a point lower than they were at the same time last year. The following is an article that appeared in the National Association of Realtors’ news blog, discussing the current home mortgage market.
Despite this week’s increase to 6.22%, the 30-year-fixed rate is still nearly half a percentage point lower than it was a year ago.
Mortgage rates are swinging upward as the real estate market heads into the spring season. Amid recent geopolitical tensions, mortgage rates rose from a 5.98% average at the end of February to 6.22% this week, according to Freddie Mac.
Economists point to growing uncertainty as a key driver.
“Mortgage rates continued to move higher, driven by increasing Treasury yields as the conflict in the Middle East kept oil prices elevated, along with the risk of a broader inflationary shock,” Joel Kan, an economist at the Mortgage Bankers Association, said in a statement earlier this week. “Mortgage rates increased across the board.”
That said, rates are still nearly a half percentage point lower than the same time last year, says Sam Khater, Freddie Mac’s chief economist. “Potential home buyers are poised for a more affordable spring homebuying season than last with the market experiencing improvements in purchase applications and pending home sales.”
Overall, mortgage rates averaged 6.05% in February, which combined with moderating home prices helped to improve housing affordability. It’s given some buyers an opening. The National Association of REALTORS®’ Pending Home Sales Index showed this week that contract signings rose 1.8% in February compared to January, a sign that more buyers are stepping back into the market.
However, Lawrence Yun, chief economist at the National Association of REALTORS®, cautions that “these conditions could reverse if higher oil prices lead to an uptick in mortgage rates.”
Fed Holds Rates Steady—for Now
At its March 18 meeting, the Federal Reserve chose to hold its benchmark short-term interest rate steady—marking the second consecutive meeting without a change.
The Fed signaled it still expects at least one rate cut in 2026, but it struck a cautious tone about the broader economy.
In its statement, the central bank noted that developments in the Middle East could impact the U.S. economy, but it added that rising gas prices tied to the conflict are expected to have only a temporary effect on inflation. The Fed now projects inflation may not return to its 2% target until 2028.
While the Fed doesn’t directly set mortgage rates, its decisions influence Treasury yields, which mortgage rates are closely tied to.
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Haas Team Real Estate
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