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Mortgage rates reach their highest levels of the year as Iran conflict hits oil prices

The average rate on a 30-year mortgage rose to 6.27% last week, according to Bankrate's national survey of lenders — the highest rate of 2026. In other news, the Federal Reserve opted last week to keep its benchmark interest rate unchanged.

Mortgage rates are below the 7% levels seen in early 2025, but they’ve moved up from their 2026 low of 6.09%. A variety of forces are at play, including Fed policy. While the central bank doesn’t control mortgage rates, it does set the tone, and it has declined to lower its benchmark rate so far this year. 

Meanwhile, the mortgage market has been making sense of conflicting trends. Economic growth slowed more than expected in the fourth quarter, but inflation is on the rise, driven in large part by rising oil prices. Even before the U.S. attack on Iran roiled energy markets, a report from the U.S. Bureau of Labor Statistics showed that wholesale prices rose more than expected in February. And the war in Iran has put further pressure on inflation — just as the crucial spring homebuying season kicks off.

“If the conflict is prolonged or expands, the result could be higher inflation and higher mortgage rates,” says Lisa Sturtevant, chief economist at BrightMLS. “In that case, we may be looking not just at a delay in the spring homebuying season, but at a broader shift in the trajectory of a housing market that had been expected to rebound in 2026.”

In an unfortunate bit of timing, rates increased sharply just as the average rate on a 30-year mortgage began flirting with 6%, a point at which many in the industry expected consumer demand for homes to rise. 

“This is not a two-week war anymore. It’s intensifying,” says Selma Hepp, chief economist at Cotality. “What does this mean for consumer confidence? More importantly, what does it mean for new construction? We did see an impact on new construction following the Gulf War.” Hepp notes that supply chain disruptions could also drive up transportation costs, putting an additional strain on the housing market. “This is not the time right now, amid all these affordability challenges.” 

Learn more: Weekly mortgage rate trend predictions

The rates you see advertised here might not match the rate you're offered. That’s because mortgage rates are influenced by personal factors, like your down payment and your debt. And different lenders may offer you different mortgage rates and fees based on their business needs. 

That’s why it’s important to shop with multiple lenders — it can save you over $1,000 a year, according to research from Freddie Mac.

Here’s how to compare mortgage rates:

• Ensure you’re comparing the same loan type. If one rate is significantly higher or lower than another, make sure it’s for the same type of product. A government-backed loan, like an FHA or VA loan, won’t have the same rate as a conventional mortgage.
• Consider APR and mortgage rate. Your interest rate is one cost of borrowing money, but your APR includes that as well as other fees associated with your loan, making it a more complete picture of the actual cost. Some lenders charge lower rates on mortgages, but higher fees.
• Get quotes from different types of lenders. You may find different costs from a local bank or credit union compared with a national bank or an online lender. 

How your mortgage rate affects your monthly payment

Your mortgage rate impacts how much you pay month to month — sometimes by a lot. For this example, we’re using the principal and interest payment on a $400,000 house, assuming 20% down and a 30-year fixed-rate mortgage.

As you can see, every increase of half a percentage point between 5% and 7% changes the monthly payment by around $100. On a yearly basis, that’s a difference of $1,200. For more expensive homes, this difference is even larger.

How your mortgage rate is determined

Your mortgage rate depends on a number of factors, including your individual credit profile and what’s happening in the broader economy. These include:

• Your lender: Lenders set rates based on many factors, including their own supply and demand.
• Your credit and finances: The better your credit score and the higher your income compared to your debt, the better the interest rate you’ll likely get.
• Your loan size and type: The size of your loan, your down payment and the type of loan all affect your mortgage rate. For example, making a bigger down payment typically earns you a lower mortgage rate, as it reduces the lender’s risk. 
• Economic factors: Broadly, mortgage rates are impacted by forces like the Federal Reserve, inflation and investor appetite.
• Mortgage points: Also known as discount points, these are upfront fees you can pay to reduce your interest rate. Decide whether they're worth it with our guide to mortgage points.

How to refinance your current mortgage

Before you start applying for a mortgage, here are some mortgage resources to prepare you for the process: