US mortgage rates have climbed to their highest level since late 2025, with the Iran conflict adding an inflation premium to long-term borrowing costs and cooling what had been a nascent refinancing recovery.
Refinancing demand fell 19% after rates moved higher, according to CNBC, a sharp reversal that underscores how sensitive the housing market remains to even modest rate moves. The rise has been attributed in part to war-driven inflation fears, which have pushed up Treasury yields — the primary benchmark for fixed mortgage pricing.
The Federal Reserve is not expected to act on rates at its current meeting, according to Mortgage News Daily, leaving homeowners and buyers with little near-term relief. With rates now at a three-month high and geopolitical uncertainty unresolved, the refinancing window that briefly opened earlier this year appears to have closed again.
The housing market had shown tentative signs of stabilisation heading into spring, traditionally the busiest selling season. A sustained move higher in mortgage rates complicates that picture, particularly for existing homeowners locked into low pandemic-era rates who have been reluctant to trade up.
