The daily average mortgage rate rose to a six-month high of 6.53% on March 20.
Mortgage rates are jumping because the Iran war is escalating, increasing the likelihood that oil prices will stay higher longer, and because of the Fed’s reaction to it.
News broke on March 20 that the U.S. is sending thousands more troops to the Persian Gulf, pointing to a prolonged conflict and propping up oil prices. A brief spike in oil prices would not affect Fed policy or interest rates significantly; the Fed ignores that kind of inflation because their policy tools don’t impact oil prices .
But a sustained period of higher oil prices means that other prices in the economy could increase, causing people to expect higher inflation. That self-fulfilling prophecy leads to actual inflation. That’s the Fed’s worst nightmare, and they want to avoid that risk through policy. Fed Chair Jerome Powell highlighted that risk at the Fed meeting on Wednesday , and Fed Governor Christopher Waller reiterated that sentiment today as he explained why he supported leaving interest rates unchanged this week.
Mortgage rates are increasing because they’re priced off 10-year Treasury yields , and those yields increase when expectations of future Fed policy changes. A few weeks ago, investors expected the Fed to cut interest rates twice in 2026. Today, they are not only expecting zero rate cuts in 2026, but they are pricing in a chance that the Fed will hike rates this year. That is sending 10-year yields up close to 4.4%, a level we haven’t seen since last July when the economy was absorbing the effects of Liberation Day.
Chen Zhao Chen Zhao is the head of economics research, where she produces research on the housing market for public and internal audiences.
Previously, she was an executive director leading housing finance and financial markets research at the JPMorgan Chase Institute. Prior to joining JPMCI, Chen was an economics consultant at Analysis Group, Inc., where she worked on financial litigation cases and led teams conducting health economics and outcomes research on behalf of pharmaceutical companies.
While in graduate school, Chen was with the Center for Economic Studies and the Social Economic and Housing Statistics Division at the US Census Bureau, where she conducted applied microeconomics research using large scale restricted-access linked survey-administrative data. She started her career at the White House Council of Economic Advisers, where she focused on labor and health economics.
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