U.S. mortgage rates climbed sharply last week, reaching their highest level since August as escalating oil prices—linked to the ongoing conflict involving the United States, Israel, and Iran—intensified inflation concerns. According to the Mortgage Bankers Association, the average contract rate for a 30-year fixed mortgage rose by 14 basis points to 6.57% for the week ending March 27. The spike reflects rising yields on Treasury bonds, which serve as key benchmarks for home loan rates.
The increase marks one of the steepest weekly jumps since the aftermath of tariff measures announced by Donald Trump during his “Liberation Day” policy rollout. Since the outbreak of conflict on February 28, mortgage rates have surged by a total of 48 basis points. This sharp rise has dampened housing activity, with refinancing applications plunging 17.3%, while purchase loan applications saw a smaller decline of 2.6%.
Market volatility has been fueled by disruptions in global oil supply, particularly through the Strait of Hormuz, a critical passage for roughly 20% of the world’s oil trade. Crude oil prices have surged to around $118 per barrel—over 50% higher than pre-conflict levels—driving up Treasury yields. Although the 10-year Treasury yield has eased slightly in recent days amid hopes of de-escalation, it remains elevated at 4.32%, continuing to pressure borrowing costs and weigh on buyer confidence in the housing market.
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