After what was a decent week for mortgage rates, in which they fell back closer to 6.50%, they appear to be on the rise again.
The latest driver (surprise, surprise) is tensions in the Middle East and higher oil prices as a result.
That pushed 10-bond yields back up about five basis points today, which will translate to higher 30-year fixed mortgage rates as well.
This type of volatility is to be expected, especially as both sides seem unwilling to budge or make any major concessions.
The bigger question is how long the impasse may last, and how high mortgage rates will go in the process.
More Uncertainty in Middle East Leads to Higher Mortgage Rates
It wasn’t a good weekend for tensions in the Middle East.
There have been reports of both the U.S. and Iran exchanging fire with one another.
And continued Israeli strikes in Lebanon, which has caused Iran to suspend talks with the U.S.
It doesn’t bode well for the ongoing ceasefire, nor an end to the conflict that would rather crucially lead to a reopening of the Strait of Hormuz.
As I’ve laid out in the past, it’s what has pushed mortgage rates up about 0.75% since the end of February.
Absent this conflict, it’s hard to picture a 30-year fixed mortgage rate well above 6% today.
Not much else has really changed since that time, so as I’ve said before, it’s a very clear issue with a clear solution.
But at this point even the clear solution (opening the Strait) would take time to implement, and it wouldn’t be without its impact.
Oil prices could stay elevated even after a reopening, meaning consumers will continue to face higher gas prices.
In addition, higher input costs on just everything else could lead to another bout of inflation as businesses pass costs on down the line.
Simply put, bonds and mortgage-backed securities (MBS) don’t like inflation, so yields (interest rates) rise to compensate.
Another Leg Up for Mortgage Rates Coming?
I posted this chart last week showing mortgage rates rising the past few months, seemingly hitting higher highs.
So despite the usual ebb and flow, and pullbacks after rises, they appear to be moving higher as the year goes on.
They touched roughly 6.75% at their worst (so far) in mid-May before falling back toward 6.50% last week.
Assuming this Iran-U.S. impasse continues, which seems pretty likely, the next leg up could be 6.875% or even 7%.
Since things got underway, my target for the 30-year fixed has been around 7%, though I said just “kissing” 7%.
In other words, there’s a bit of a lid on mortgage rates because most see this energy crisis as temporary, as they have been in the past.
And with most other stuff, whether it’s labor or mortgage spreads relatively intact, it’s pretty much just this issue that’s a potential mover.
That might mean the range for mortgage rates is somewhat tight here, even if there continues to be upward pressure.
Maybe that’s the silver lining if there is one.
- Mortgage Rates Back on the Move Higher as U.S.-Iran Talks Stall - June 1, 2026
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