(NEW YORK) — Mortgage rates have climbed to their highest level since September as fallout from the Iran war ripples through financial markets, Freddie Mac data on Thursday showed.
The average interest rate for a 30-year fixed-rate mortgage jumped to 6.46%, continuing a weeks-long surge since the war began on Feb. 28, during which time mortgage rates have increased nearly half a percentage point.
Mortgage rates remain slightly lower than this time a year ago, when the average rate for a 30-year fixed mortgage stood at 6.64%.
The recent spike in borrowing costs risks further strain on U.S. households as they weather elevated gasoline prices.
The rise in mortgage rates owes to a jump in U.S. Treasury yields as investors fear a bout of inflation in response to the Middle East conflict.
High bond yields make borrowing more expensive for average Americans, since 10-year Treasury rates influence the rates offered for a variety of loans, including mortgages and credit cards.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks higher consumer prices that would eat away at those annual payouts. In turn, bonds often become less attractive in response to economic turmoil. When demand falls, bond yields rise.
The yield on a 10-year Treasury bond, meaning the amount paid to a bondholder annually, stands at about 4.31%, about 0.35 percentage points higher than pre-war levels.
“Mortgage rates have risen as bond market yields have sought to price in the risk of higher inflation in the future,” Mark Hamrick, senior economic analyst at Bankrate, previously told ABC News.
Last week, bond yields soared close to levels reached in the aftermath of President Donald Trump’s “Liberation Day” tariffs in April 2025, when the 10-year Treasury yield peaked at around 4.5%.
Bond yields eased in recent days as Trump signaled a possible off-ramp from the war with Iran.
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