Mortgage Rates Hit Yearly High Amid Iran Conflict

Mortgage rates climbed to 6.85% today, marking a yearly high and surpassing last year's rate of 6.78% for the same day in 2026. This increase coincides with escalating geopolitical tensions in Iran, which have driven West Texas Intermediate (WTI) oil prices above $90 and Brent Crude above $100. The 10-year Treasury yield reached 4.71% this morning, its highest point of the year, while the 2-year yield hit 4.37% and the 3-month yield reached 3.88%, also yearly highs. These economic indicators are occurring as the Federal Reserve prepares for its next meeting, with analysts assigning a 36% probability of a rate hike due to hawkish sentiment.

Analysts had previously warned that an escalation of the Iran conflict could jeopardize forecasts for the 10-year yield to peak at 4.60% and mortgage rates at 6.75%. The current conflict, referred to as "Iran 2.0," has intensified beyond initial expectations, with direct military actions occurring during market hours, leading to immediate impacts on oil prices. President Trump's statement about considering a "massive attack" has further contributed to the upward pressure on interest rates.

Despite the significant escalation, current projections suggest that 30-year mortgage rates are unlikely to exceed 7.25%, remaining within a range of 0.375% to 0.43% above the 6.75% forecast. Data from HousingWire's mortgage rates center, utilizing Polly locked rate data, indicates rates at 6.90%, while Mortgage News Daily reports 6.85%. This suggests that the ongoing conflict is indeed pushing rates into a higher bracket.

The 10-year Treasury yield has been on a steady upward trend over the past 13 days, correlating with the "Iran 2.0" conflict. The yield is currently trading near the upper range of its five-year historical levels. The ongoing conflict remains a critical factor influencing the 10-year yield, with any negative developments potentially driving yields higher.