Mortgage rates have risen to their highest level in over a month, with Freddie Mac reporting that the average rate on the benchmark 30-year fixed mortgage increased to 6.11% from last week's 6% reading, according to its Primary Mortgage Market Survey released Thursday [1]. This compares to 6.65% a year ago [1]. The average rate on a 15-year fixed mortgage also rose, reaching 5.5% from last week's 5.43% [1].
The uptick in mortgage rates is attributed to inflation fears fueled by the ongoing conflict in Iran, which has pushed oil prices higher and caused yields on the 10-year Treasury to climb, hovering around 4.23% as of Thursday afternoon [1]. Hannah Jones, Realtor.com senior economic research analyst, noted that these geopolitical tensions are overriding typically soft economic signals, such as weaker jobs data—unemployment increased to 4.4% and nonfarm payroll employment fell by 92,000 jobs—and inflation drifting lower in February, with headline inflation steady at 2.4% and core inflation at 2.5% [1]. Under normal circumstances, these economic readings would exert downward pressure on mortgage rates, but the Middle East conflict is currently the dominant factor [1].
Despite the modest increase in rates, buyer activity has responded positively, with existing-home sales rising 1.7% in February and purchase applications also increasing this week, according to Sam Khater, Freddie Mac’s chief economist [1]. Khater highlighted that buyers are entering the spring homebuying season with rates down more than half a percentage point compared to the same time last year [1].
Mortgage rates are influenced by several factors, including the Federal Reserve and geopolitical events, though they are not directly affected by the Fed's interest rate decisions and instead closely track the 10-year Treasury yield [1].
CONCLUSION
Mortgage rates have risen to 6.11% amid inflation concerns driven by the Iran conflict, despite softer economic data that would normally lower rates. Buyer activity remains resilient, with increased home sales and purchase applications, as the market enters the spring season with rates lower than last year. The geopolitical situation is currently exerting more influence on mortgage rates than domestic economic indicators.