Mortgage Rates Jump to 6.12% as US-Iran Tensions Push Treasury Yields Higher

The 30-year fixed mortgage rate surged to 6.12% on Monday, reaching its highest level in three months and reversing weeks of gradual decline that had begun to reinvigorate buyer demand. The Freddie Mac Primary Mortgage Market Survey confirmed the jump, with the 15-year fixed settling at 5.62%. Refinance rates climbed even higher, with the 30-year refi product averaging 6.72% — a 12-basis-point increase in a single week. The catalyst: escalating geopolitical tensions that are roiling bond markets globally.

The immediate trigger for the rate move is the outbreak of U.S.-Iran military conflict, which sent investors rushing into Treasury bonds as a flight-to-safety trade. Paradoxically, strong demand for Treasuries initially pushed yields down — but inflation fears quickly dominated, as oil prices spiked on supply disruption concerns and traders began pricing in the inflationary implications of a prolonged Middle East conflict. The 10-year Treasury yield climbed to 4.23%, a two-month high.

The Federal Reserve's upcoming FOMC meeting is now universally expected to hold the federal funds rate unchanged. Markets have sharply scaled back expectations for rate cuts in 2026: fed funds futures now price in just one 25-basis-point cut by year-end, down from two cuts priced as recently as three weeks ago. The shift reflects both the geopolitical inflation risk and stronger-than-expected February jobs data that reduced the urgency for monetary easing.

For home buyers who locked in rates during the February dip to near 5.94%, the timing proved fortunate. A buyer who secured a $450,000 mortgage at 5.94% is saving approximately $110 per month compared to today's 6.12% rate. For buyers currently in the market, the question is whether to lock now or wait for potential rate relief — a bet that is increasingly uncertain given the unpredictable geopolitical backdrop.

Mortgage brokers report that purchase application activity slowed noticeably last week as rates moved higher, though it remains above year-ago levels. Refinance applications, which had surged during the February rate dip, pulled back sharply. The rate volatility is a reminder that the path to lower mortgage costs is rarely linear, and buyers waiting for rates to hit a specific target before entering the market may be repeatedly disappointed by geopolitical and economic surprises.