The Iran conflict is driving financial markets, including mortgage rates. While conflicts typically favor rate reductions by encouraging investors toward safer bond investments, this situation differs due to inflationary pressures.
The Inflation Connection
Energy commodities flowing through war-affected waterways have increased sharply, raising inflation expectations. This scenario typically correlates with higher interest rates and reduced Federal Reserve rate-cut probabilities.
Rate Movement
The market currently anticipates no rate cuts by September, with minimal probability of increases. Mortgage rates have climbed above 6.6% this week, with weekly indices continuing upward. The bond market shows modest improvement compared to stock losses, reflecting some “safe-haven” investment flows.
Oil Price Analysis
Current oil prices remain below earlier March levels and lower than Monday’s figures, yet inflation expectations persist. The market assumes prices exceeding $90 per barrel will damage inflation outlooks, though recession remains another potential outcome.
Housing Implications
Continued conflict extends the potential for rate increases. Even if hostilities cease, substantial rate recovery from monthly losses appears unlikely in the near term.
Economic Data
Recently Released: Jobless claims reached 210K; consumer sentiment dropped to 53.3; inflation sentiment rose to 3.8% (one-year) and 3.2% (five-year).
Upcoming: Home prices, PMI indices, employment figures, and consumer confidence data scheduled through April 3.
Current Rates (Mortgage News Daily)
| Loan Type | Rate | Change |
|---|---|---|
| 30YR Fixed | 6.64% | +0.02 |
| 15YR Fixed | 6.15% | +0.01 |
Source: US Housing Market Weekly — Jay Bridges, Mortgage Lender, Priority Capital Corporation