Iran war’s oil price increase drives 10-year yield to 4.58%
The average 30-year fixed-rate mortgage rose to 6.55% from 6.49% a week earlier, mortgage buyer Freddie Mac said Thursday. A year ago, the rate was 6.75%.
The 10-year Treasury yield, which lenders use as a guide for pricing home loans, reached 4.58% at midday Thursday, up from 4.54% a week ago. It was 3.97% in late February, before the conflict with Iran began.
The war has driven crude oil prices sharply higher, stoking expectations of hotter inflation. That has pushed long-term bond yields upward, and mortgage rates have followed.
For prospective homebuyers, the result is higher monthly payments. A sustained increase of just a few tenths of a percentage point can add hundreds of dollars to the monthly cost of a typical loan, narrowing what households can afford at a time when affordability challenges have already sidelined many would-be buyers.
Mortgage rates have been mostly rising this year as the Iran war’s effect on oil prices and inflation expectations has kept bond yields elevated.