Iran War Drives Mortgage Rate Increases, Shifts Focus to Variable Contracts

The ongoing conflict in Iran is contributing to rising mortgage rates in the United States, impacting home buyers and potentially shifting preference towards variable-rate contracts. Recent data indicates a climb in rates, with experts suggesting further increases are possible depending on the duration and escalation of the conflict.

Mortgage Rate Increases

The average 30-year fixed mortgage rate has risen to 6.22% as of March 19, 2026, up from 6.11% the previous week, marking the highest level since July 2024. CNN reports this increase is directly linked to the war in Iran and the resulting economic uncertainty.

Freddie Mac data shows a more gradual increase, with the rate climbing from 5.98% on February 26, 2026, to 6.11% by March 12, 2026. RefiGuide notes this 13-basis-point increase, while seemingly little, has significant financial implications for homebuyers.

Even a modest rise to 6% can deter some buyers, according to Kate Wood, a lending expert at NerdWallet, as reported by CBS News. On a $400,000 mortgage, the difference between 5.98% and 6.11% translates to approximately $31 more per month, or $11,160 over the life of a 30-year loan.

The Link Between the War, Oil Prices, and Inflation

The primary driver behind the increase in mortgage rates is the surge in oil prices following the conflict in Iran. Oil prices jumped 25% since the war began, climbing from $71.23 per barrel on March 2 to $119.48 on March 9, exceeding $100 for the first time since Russia’s invasion of Ukraine in 2022. RefiGuide explains that this is due to disruptions in crude shipments through the Strait of Hormuz, leading to shortfalls in global supply. The world is currently losing access to around 20 million barrels of oil a day due to slowdowns in tanker traffic in the strait. CBS News

Rising oil prices fuel inflation expectations, which in turn boost bond yields as investors demand higher returns. Mortgage rates tend to move in tandem with the 10-year Treasury note, which reached 4.14% on Thursday afternoon, up from 3.96% on February 27. CBS News

Variable vs. Fixed Rate Mortgages

With fixed mortgage rates climbing, some borrowers are considering variable-rate mortgages as a potentially cheaper alternative. Still, variable rates approach with the risk of further increases if inflation continues to rise. CNBC suggests that economists predict rates could fluctuate throughout the year if the fighting continues.

Looking Ahead

The trajectory of mortgage rates will likely depend on the duration and intensity of the conflict in Iran, as well as its impact on global oil prices and inflation. Homebuyers should carefully consider their risk tolerance and financial situation before choosing between a fixed-rate and a variable-rate mortgage. Monitoring market developments and seeking advice from a qualified mortgage professional are crucial in navigating this uncertain environment.