This post reflects conditions as of March 23, 2026. Given the rapidly evolving nature of this conflict, some specifics may change. Follow for updates.  

If you have been watching the news or your gas prices, you already know the world feels different than it did a month ago. On February 28, 2026, the United States and Israel launched a joint military operation against Iran. We are now 24 days into what has become one of the most significant geopolitical conflicts in a generation, and the ripple effects are already hitting your wallet, your home purchase plans, and the broader mortgage market.

The Spark That Changed Everything for Housing

Here is the cruel irony of timing. The start of 2026 came with improved homebuyer affordability as interest rates fell below 6% for the first time since 2022. The average 30-year fixed mortgage rate dipped to 5.98% on February 26. For buyers who had been sitting on the sidelines for years, this felt like the starting gun. Then, two days later, the war began.

Mortgage rates climbed to 6.11% in the week ending March 12, the biggest weekly increase since Liberation Day tariffs caused bond yields to spike. By March 19, the average 30-year fixed mortgage rate rose again to 6.22%, the highest level since early December, reflecting inflation fears rippling through markets. In under three weeks, buyers who were on the verge of locking in a generational low saw that opportunity vanish.

Why Does a War in the Middle East Affect Your Mortgage Rate?

This is the question I get most from clients, and it is a fair one. The connection is not obvious, so let me walk you through it.

Mortgage rates closely track the 10-year U.S. Treasury yield. That yield is essentially a gauge of how investors feel about future inflation and economic growth. When inflation fears rise, investors demand higher returns on bonds, which drives yields up, and mortgage rates follow.

The Iran war's primary pressure point is oil. Mortgage rates and the 10-year Treasury yield rose in lockstep with oil prices since the start of the war on February 28. The price per barrel of oil climbed to a high of $119.48 on March 9, while the yield on 10-year Treasuries rose from 3.96% before the war started. Shipping lines rerouted to avoid the Strait of Hormuz even before Iran threatened to fire on ships passing through the strait, as well as the Red Sea, where the Iran-allied Houthi movement had previously attacked ships. Tehran has effectively closed the Strait of Hormuz, through which one-fifth of global oil supplies pass. The chain reaction works like this: a closed Strait leads to an oil supply shock, which drives energy prices higher, which raises inflation fears, which pushes Treasury yields up, and ultimately mortgage rates climb with them.

Where Rates Stand Today and What Could Push Them Higher

Brent crude reversed earlier losses to trade around $112.68 per barrel as of this week, with U.S. West Texas Intermediate near $99 per barrel. Stocks in China and Hong Kong were on track for their worst day in nearly a year as the escalating war fanned stagflation fears and roiled global financial markets. The head of the International Energy Agency warned that the situation in the Middle East is severe, describing it as worse than the two energy crises of the 1970s combined.

The most immediate wildcard right now is the 48-hour ultimatum demanding Iran reopen the Strait of Hormuz, which expires tonight. Iran's Parliament speaker has warned that critical infrastructure and energy infrastructure throughout the region will be considered legitimate targets if the United States follows through on threats to strike power plants, promising that oil prices will rise for a long time as a result. If that escalation materializes, expect further upward pressure on oil, inflation expectations, and mortgage rates.

What This Means for the Federal Reserve

Before the war, markets were pricing in multiple Fed rate cuts in 2026. That picture has changed dramatically. There is now a 95% probability the Fed maintains the current range at its April 30 meeting and a 77% likelihood it will hold steady in June, compared to 70% and 31% respectively just a month ago. Some economists now say there is a real chance the Fed will not make any cuts at all this year. Federal Reserve Chair Jerome Powell acknowledged the uncertainty directly, saying that nobody truly knows what the economic effects will be, and that they could be bigger or smaller in ways that are difficult to predict. That uncertainty alone is a problem for mortgage rates, because markets tend to react poorly to ambiguity even before bad news fully arrives.

The Housing Market: Spring Season Under Pressure

Spring is typically the hottest season for real estate. The outlook for the spring homebuying season has become cloudier than it was even just a month ago, according to BrightMLS chief economist Lisa Sturtevant. A limited conflict could allow the housing market to rebound quickly, but a prolonged conflict could stall home sales activity this spring. The early data already shows the strain. Mortgage loan applications were down 10.9% for the week ending March 13 compared to the week prior, according to the Mortgage Bankers Association. Rising rates and increased economic uncertainty may also be holding some would-be sellers back, which means inventory, already tight, may not recover the way many had hoped entering 2026.

Short-Term Outlook: The Next One to Six Months

Mortgage rates are likely to remain volatile and elevated in the 6% to 6.5% range, barring a rapid ceasefire or dramatic drop in oil prices. Consumer sentiment is souring, with the University of Michigan survey hitting its lowest reading of the year in March. The United States is facing what RSM chief economist Joe Brusuelas describes as a potential short-term affordability shock, as the war cuts into discretionary spending, raises mortgage rates, batters stock markets, and undermines consumer confidence. Without the geopolitical tensions, experts believe we would likely be seeing the 10-year Treasury well below 4%, with mortgage rates in the high 5s, according to loanDepot chief investment officer Jeff DerGurahian. That is where rates were headed before February 28, and that opportunity has been put on hold.

Long-Term Outlook: Six to Twenty-Four Months

The long game depends almost entirely on two variables: how long the conflict lasts and whether the Strait of Hormuz reopens for normal shipping. If a ceasefire or diplomatic resolution emerges, markets could revert quickly. Oil prices would normalize, inflation fears would subside, and the Federal Reserve's rate-cutting path could resume on something close to the original timeline.

If the conflict drags on, the housing market faces a more structural challenge. Sustained high energy prices keep inflation elevated, the Fed stays on hold longer and delays rate relief, consumer confidence continues to erode and dampens buyer demand, and higher construction costs tied to energy prices slow new housing supply at a time when inventory is already insufficient. The best-case scenario for buyers and the mortgage market is a swift resolution. The worst case is a prolonged conflict that embeds inflation into the economy for another 12 to 18 months.

What Should You Do Right Now?

Despite the uncertainty, I want to be direct with you: paralysis is rarely the right strategy. If you are actively buying, do not try to time the market perfectly. The best approach this year is to lock in your rate at the right moment. If you see rates reach a low point, call your mortgage advisor to secure that rate immediately. Rates will swing up and down throughout this period, and being prepared to act quickly is the real advantage.

If you are thinking about refinancing, monitor daily. We saw rates briefly touch 5.98% in February. Opportunities like that will come again even in this environment. Having an advisor who is actively watching the market for you is the kind of edge that actually matters in a volatile rate climate.

If you are on the fence about whether to buy at all, keep some perspective. Buying power is still meaningfully better than it was in 2023 and 2024. Affordability gains over the past year remain largely intact, with buying power up approximately $30,000 compared to this time last year. Short-term volatility is real, but it does not erase the long-term case for homeownership.

Bottom Line

The Iran conflict has injected real uncertainty into the mortgage market at the worst possible time, right as buyers were regaining confidence and affordability was finally improving. Rates have moved from 5.98% to 6.22% in under four weeks, mortgage applications are dropping, and the Federal Reserve's hands are increasingly tied by inflationary pressure it did not create and cannot easily control.

But history tells us that geopolitical crises, as severe as they are, tend to resolve. When they do, markets move fast. The buyers who are prepared, pre-approved, and working with an advisor they trust will be positioned to move quickly when that window reopens. That is exactly what I am here to help you do.