Oil shock and weak jobs pulled Fed policy in opposite directions – mortgages were caught in the middle
Federal Reserve governor Christopher Waller walked into this week’s meeting ready to break ranks. The February jobs report showed a loss of 92,000 positions, and for a policymaker who has worried for months about a “clearly weakening” labor market, it looked like time to cut.
Instead, a new Middle East war and a sudden oil shock pushed him back toward the consensus – and extended the wait for rate relief that mortgage professionals hoped would firm up this spring.
Waller said on CNBC that when he first saw the jobs data, “I thought that’s it, I’m dissenting,” against the decision to hold rates steady.
“Since that time, the Strait of Hormuz was closed,” Waller said. “This was looking like it was going to be a much more protracted conflict, and oil prices were going to stay high for a longer time. So that suggested inflation was more of a concern than I was putting it.”
Waller, who dissented in January in favor of a cut, said he still saw room to ease later in the year if the labor market weakened further.
“If things went reasonably well and the labor market continued to be weak, I would start advocating again for cutting the policy rate later this year,” he said.
“I just wanted to wait and see where this went.”
War, oil and the mortgage rate path
Traders once bet on multiple cuts in 2026. After the Iran conflict and closure of a key shipping lane, futures priced in little easing until well into 2027. That dynamic was already familiar to brokers.
Amir Nurani, broker-owner at Left Coast Leaders told Mortgage Professional America that “war is inflationary” because of spikes in oil and the prospect of more money printing, warning that the latest conflict has already shoved the 10‑year Treasury and mortgage rates higher.
In fact, average US mortgage rates climbed for the third straight week, pushing the 30-year fixed rate to its highest level in more than three months. The war with Iran unsettled global markets and reignited inflation fears, driving borrowing costs higher.
The benchmark 30-year fixed-rate mortgage averaged 6.22% as of March 19. That's up from 6.11% a week earlier and the highest level since late 2025, according to Freddie Mac’s Primary Mortgage Market Survey.
Average US mortgage rates climbed for the third straight week, pushing the 30-year fixed rate to its highest level in more than three months. The war with Iran unsettled global markets and reignited inflation fears, driving borrowing costs higher.https://t.co/ntfM6nQ8Xr
— Mortgage Professional America Magazine (@MPAMagazineUS) March 19, 2026
What it meant for housing finance
For brokers and lenders, Waller’s shift highlights that geopolitical shocks, from tariffs to regional wars, could whipsaw bond yields yet leave mortgage rates tethered to the same forces, such as inflation, jobs and Fed expectations.
That meant the path to lower borrowing costs still runs through a slower economy and cooler prices, not just headlines from the Strait of Hormuz.
Waller made clear he was not ruling out cuts – only delaying them until he saw whether oil‑driven inflation or labor‑market weakness would win the tug‑of‑war.
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