Image: Finder, photo via Creative Commons.
After briefly dipping below 6 percent a few weeks ago, mortgage rates have gone back up, currently reaching 6.11 percent. According to experts, the rise is a direct result of Trump’s war with Iran.
This spike represents the largest increase since April last year, when Trump’s so-called “Liberation Day” tariffs instigated a similar rate hike. Now, Trump’s actions on the world stage have once again impacted prices at home.
Mortgage rates are linked to the yield on 10-year US Treasury notes, which industry expert Jeff DerGurahian said are typically well below 4 percent. But since the war began, that number has shot up to a six-week high of 4.25 percent as it “hinges on the price of oil,” and it’s no secret that oil prices are climbing because of the war and its disruption of global energy supplies.
With all the uncertainty caused by the conflict, it is unlikely the Federal Reserve will be able to cut rates in the foreseeable future.
These high rates come at a time when the American housing market is already in crisis, with over 80 percent of Americans agreeing that housing affordability is a problem. In a recent poll, voters named the cost of living their top concern, with nearly a quarter saying they want Congress to prioritize housing cost reduction above all other considerations.
While housing prices have remained high, the slight dip in rates over recent months drove a rare increase in buyers, with existing-home sales growing by 1.7 percent in the month leading up to the war. Now that progress is reversing.
“If the conflict in the Middle East drags on and oil prices remain high,” DerGurahian warned, “the Federal Reserve will err on the side of caution.” That means maintaining higher mortgage rates.
What’s more, this issue looms right as the spring home shopping season hits, which experts say is a crucial time for buyers and sellers.
“A prolonged conflict could stall home sales activity,” said Lisa Sturtevant, chief economist at BrightMLS. “The outlook for the spring homebuying season has become cloudier than it was even just a month ago.”