Mortgage Rates Surge Above 6% as Iran Conflict Fuels Inflation Fears

March 2026 continues to be a challenging month for mortgage rates, largely due to the escalating conflict involving Iran. Even if the conflict were to cease immediately, economists believe the disruption to global infrastructure and the initial spike in energy prices have already triggered “second-round effects.” This means inflation expectations and interest rates won’t revert to February levels quickly, even with de-escalation.

Recent Rate Increases

Mortgage rates jumped significantly on March 8, 2026, following headlines regarding U.S. Troop deployment. Many lenders repriced their offerings, pushing the average top-tier 30-year fixed rate to 6.55%, a level not seen since August 2025. Mortgage News Daily Chart

Even as subsequent commentary suggesting de-escalation helped the bond market recover some initial losses, the market is seeking a more definitive announcement before reacting more substantially.

The Impact of Oil Prices

The primary driver behind the rate increases is the surge in oil prices. U.S. Oil futures surpassed $100 a barrel on Sunday, March 2, 2026 – the first time crude reached this level since Russia’s invasion of Ukraine in 2022. IBTimes Prices briefly touched $110 a barrel, fueled by the U.S.-Israeli military campaign against Iran effectively shutting down the Strait of Hormuz, a critical waterway for global oil supply.

This disruption has led to a significant increase in gasoline prices. The national average for gasoline has jumped to $3.45 a gallon, an increase of 47 cents from the previous week, according to AAA data. IBTimes

Current Mortgage Rate Averages (March 25, 2026)

• 30-year fixed: 6.18% (up 0.11% since yesterday) Mortgage Research
• 15-year fixed: 5.39% (up 0.1%) Mortgage Research
• 30-year FHA: 5.61% (up 0.15%) Mortgage Research
• 30-year jumbo: 6.68% (up 0.16%) Mortgage Research

The Unexpected Resilience of Rates Despite Job Losses

Traditionally, negative jobs data would signal potential rate cuts. However, the recent loss of 92,000 jobs in February – significantly lower than the expected gain of 59,000 – has not triggered cuts due to the overriding influence of geopolitical factors and rising oil prices. IBTimes The unemployment rate ticked up to 4.4%.

Looking Ahead

The trajectory of mortgage rates will largely depend on the duration and intensity of the conflict involving Iran. A swift and decisive resolution could lead to a stabilization or even a decrease in oil prices, potentially easing pressure on rates. However, a prolonged conflict could exacerbate inflationary pressures and push rates even higher. CBS News Investors are currently wagering on a brief conflict, but this assessment is subject to change.