Mortgage Rates Hit a 3-Year Low—Then Came the Iran Conflict

Mortgage rates recently gave homebuyers some relief, slipping below 6% for the first time in more than three years. The late-February milestone marked a notable shift after a long stretch of elevated borrowing costs.

But the reprieve didn’t last. After the Iran conflict began, rates on 30-year mortgages have been inching higher almost every day. While the increase is modest so far, it has interrupted what had been a welcome downward trend.

Where Mortgage Rates Stand Now

Freddie Mac’s weekly survey showed the average 30-year fixed mortgage rate falling to 5.98% on Feb. 26—the first time it has dipped below 6% since September 2022. While that weekly figure includes loans requiring prepaid points, the comparable average for zero-point loans was 6.16%, based on Investopedia’s daily 30-year rate average from Zillow.

Two days after this welcome dip, the Middle East conflict began. After the Feb. 27 drop to 6.16%, Investopedia’s daily average has climbed to 6.31%, rising almost every day and adding 15 basis points so far.

Why Rates Are Moving Higher Again

Mortgage rates don’t move in isolation. When global events inject uncertainty into financial markets, investors often adjust quickly—and that can ripple into borrowing costs.

After the Iran conflict began, volatility increased across financial markets. Oil prices rose, inflation concerns resurfaced, and long-term interest rates moved higher, pulling mortgage rates up with them.

Even modest shifts in investor expectations can influence long-term rates, which is why mortgage costs can react swiftly to geopolitical developments. As long as uncertainty remains elevated, rate swings may continue.

What Homebuyers and Refinancers Should Do Now

Mortgage rates are influenced by a complex mix of inflation trends, bond market movements, and investor expectations—and they can change quickly when new economic or geopolitical developments emerge. That makes them notoriously difficult to predict.

As a result, financial readiness may matter more than trying to achieve perfect rate timing. Buyers who are pre-approved and confident in their budget are better positioned to act if the right home comes along rather than risk losing it while waiting to see where rates move next.

Despite the recent uptick, today’s borrowing costs are still more favorable than they were just a few months ago. But since even relatively small rate swings can meaningfully affect monthly payments, it’s essential to focus on what comfortably fits your budget.

Refinancers, meanwhile, should run the numbers carefully. For homeowners with an existing rate well above 6%, even a modest dip could translate into savings—though closing costs and how long you plan to stay in the home remain important considerations.