A resolution to the conflict remains a long way off, but markets responded positively to Iran's decision to halt strikes on Israel
Iran’s announcement that it was pausing military strikes on Israel eased oil prices and sent bond yields lower on Monday morning, potentially offering a hint of relief for US mortgage rates.
Ten-year Treasury yields, which strongly influence US 30-year fixed mortgage rates, are still higher than where they sat at the beginning of Friday – but have ticked down sharply since Iran’s call.
The latest news won’t exactly stir hopes that rates are set for a big drop, but Iran’s announcement and a Truth Social post by President Trump hinting at positive signs on a more lasting ceasefire could at least ease fears of another move towards 7% mortgage rates.
Iran left the door open to a change in tack in its Monday statement, threatening a “far stronger and more forceful response” if Israel continues strikes against Lebanon.
For now, though, its decision not to escalate weekend attacks on Israel has been greeted with a sigh of relief by financial markets – and the latest decline in oil prices is a welcome development for those keeping a close eye on the national inflation outlook.
Homebuyers sitting on the sidelines because of the latest economic unrest, however, are unlikely to view the latest news as a reason to step off the sidelines just yet.
The beginning of the Iran war at the end of February poured cold water over a hoped-for housing market resurgence as rates moved higher, spurred by a jump in oil prices after Iran blocked the Strait of Hormuz.
In recent weeks, mortgage brokers have highlighted the impact the conflict has had on the mortgage and housing outlook, not least because it appears to have cemented the likelihood of rates staying in the sixes for the rest of the year.
Some experts, including Cotality chief economist Selma Hepp, even say rates may not fall again between now and the beginning of 2027.
Iran’s declaration of an end to military operations against Israel will, for now, boost hopes that the conflict could be nearing some form of resolution, even if US and Iranian negotiators still appear no closer to reaching a deal or even progressing with talks.
Last week, the average 30-year fixed mortgage rate retreated slightly, according to Freddie Mac, ticking down from their highest level since last summer and slipping to 6.48%.
Still, rates are much higher than where they sat before the war. In January, they briefly ticked into the fives after President Trump’s instruction for Fannie Mae and Freddie Mac to purchase $200 billion worth of mortgage bonds.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
