What the War with Iran Means for Your Mortgage (And What You Should Do Right Now)

MORTGAGE INSIGHTS • MARCH 2026

A plain-English guide for home buyers and homeowners considering refinancing

If you’ve been keeping an eye on mortgage rates lately, you’ve probably noticed something frustrating. Rates were looking really promising — dipping below 6% for the first time since 2022. Then, things changed fast. The U.S. military conflict with Iran began at the end of February. It has shaken up financial markets. Unfortunately, your mortgage rate is caught right in the middle of this turmoil. Let’s break down what’s actually happening and, more importantly, what you can do about it.

So, How Does a War Affect Mortgage Rates?

A military conflict overseas can affect the rate on your home loan. It seems strange, but the connection is actually pretty straightforward.

Here’s the short version: War → higher oil prices → higher inflation fears → higher mortgage rates.

Oil prices surged dramatically when the conflict started. They jumped from around $71 per barrel to over $115 in just a matter of days. Prices crossed $100 for the first time since Russia invaded Ukraine. When oil gets expensive, everything gets more expensive. That triggers inflation fears, which push bond yields higher. And since 30-year mortgage rates track closely with the 10-year Treasury bond yield, your mortgage rate goes up too.

The result? Rates have climbed back up to around 6.22% as of mid-March. The brief, exciting dip below 6% was erased. This dip had so many buyers and refinances ready to pull the trigger.

What Does This Mean If You’re Trying to Buy a Home?

First: don’t panic. Yes, rates have moved up, but 6.22% is still meaningfully lower than the peaks we saw in late 2023. The market hasn’t gone backward to square one — it’s just taken a detour.

That said, the spring home buying season is facing some real headwinds right now. Mortgage applications dropped nearly 11% in mid-March compared to the prior week. This indicates many buyers are hitting pause. That caution isn’t irrational — but it also means less competition for homes if you do decide to move ahead.

Our honest take: If you find a home you love, and the monthly payment works for your budget at today’s rates, act now. Don’t wait for the ‘perfect’ rate. It’s a gamble. No one knows how long the conflict will last or what rates will do next month. You can always refinance later if rates drop. Still, you can’t go back and buy that house you missed.

What If You’re Thinking About Refinancing?

If your rate is above 7%, consider refinancing. Many homeowners who bought in 2023 have this rate. Refinancing to 6.22% still makes sense to evaluate. The math can still work in your favor. This is especially true if you plan to stay in your home for several more years.

On the other hand, if your current rate is already near 6%, you should wait. It is worth holding off. There are two realistic scenarios playing out right now:

• Short conflict, quick recovery: If the situation stabilizes, oil prices will cool. Inflation fears ease. Rates drift back down within months.

• Prolonged conflict, sustained pressure: If energy disruptions persist, inflation stays elevated. The Fed keeps rates higher for longer. Mortgage rates will stay stuck above 6% well into 2027.

3 Smart Moves to Make Right Now

Regardless of which scenario plays out, here are three things worth doing today:

1. Get pre-approved (or re-evaluated) now. Knowing exactly what you qualify for at today’s rates puts you in control. You can make informed decisions instead of guessing.

2. Lock in a rate if you’re close to closing. Geopolitical situations are unpredictable. If you have a property under contract, talk to your lender about rate lock options. Even a 45-day lock will protect you from further rate creep.

3. Watch the Fed and oil markets, not the news cycle. The headlines will be dramatic, but mortgage rates respond to oil prices, inflation data, and Fed signals. Those are the three things worth tracking.

The Bottom Line

The war with Iran has made an already complicated housing market more uncertain. But uncertainty doesn’t mean you should stand still. Whether you’re buying or refinancing, the best move is an informed one. This should be based on your specific financial situation. Don’t just rely on what the rate market is doing on any given Tuesday.

We’re here to help you run the numbers and figure out what makes sense for you. Reach out anytime — no pressure, just clarity.