Mortgage rates largely unchanged despite Iran war headlines

Mortgage rate movement was quiet this week amid ongoing U.S. and Israeli operations in Iran. Mortgage News Daily (MND) reported Monday that 30-year fixed rates averaged 6.32%, up from 6.30% last week.

MND’s rate tracking refers to top-tier, 30-year fixed rates for the average lender. In its rate analysis, MND said that the “absence of meaningful movement in the underlying bond market is a testament to an increasingly high bar of relevance for war-related news. Specifically, the Iran war is the main source of inspiration not only for oil prices, but also for the bonds that dictate interest rates.”

MND also described rates this week as being “perfectly unchanged.”

Meanwhile, at HousingWire‘s Mortgage Rates Center, 30-year conforming loan rates averaged 6.39%, down 3 basis points (bps) from last week’s figure of 6.42%. Rates for 30-year Federal Housing Administration (FHA) loans dropped to 6.13%, down 2 bps, while rates for jumbo loans were at 6.26%, down 3 bps.

Calm rates come during a week where efforts to end the conflict in Iran appeared “at an impasse,” according to Reuters, with President Donald Trump expressing dissatisfaction at the latest plans from ‌Tehran.

In a post on Truth Social on Tuesday, Trump wrote that “Iran has just informed us that they are in a ‘State of Collapse’. They want us to ‘Open the Hormuz Strait,’ as soon as possible, as they ​try to figure out their leadership situation (Which I believe they will be able to do!).”

But the tide could change. According to a World Bank Group report released Tuesday, the war with Iran is expected to drive energy prices up nearly 24%, with expectations for prices to reach their highest levels since Russia’s invasion of Ukraine in 2022.

“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” said Indermit Gill, the World Bank Group’s chief economist and senior vice president for development economics.

Stability expected from the Fed

Aside from geopolitical tensions, the Federal Reserve is set to meet on Wednesday. The meeting could be Fed Chair Jerome Powell‘s last meeting as his term is set to expire on May 15. It is unclear whether Powell will stay on as a member of the Fed’s Board of Governors, despite the Department of Justice dropping its investigation last week regarding cost overruns on the Fed’s headquarters renovation.

It is expected that the Fed will hold its benchmark overnight interest rate steady in the 3.50% to 3.75% range.

Professionals in the housing space are unsurprised by current rate levels, given ongoing elevated inflation and wartime tensions. But mortgage applications are back on the upswing with a 7.9% increase last week, according to data from the Mortgage Bankers Association (MBA).

“Lower mortgage rates last week, driven in part by the ceasefire in the Middle East, supported weekly and annual gains in both refinance and purchase activity, with purchase applications up 14% from a year ago,” Bob Broeksmit, the MBA’s president and CEO, said in a statement. “While geopolitical risks and uncertainty remain, a resilient labor market and increased inventory are supporting homebuyer demand.”

Ryan Lee Chapman, a loan officer at Hope Mortgage Solutions, said that markets “remain nervous” about the tensions and inflation.

“Even though the Fed is expected to leave things alone for now, investors are still worried inflation is hanging around longer than everyone hoped, especially with oil prices climbing and the economy continuing to show strength,” Chapman said.

Melissa Cohn, regional vice president at William Raveis Mortgage, said she expects rates to stay hovering above 6%.

“Mortgage rates will continue to remain above 6% as the price of oil remains near $100 a barrel.  Higher oil prices are inflationary, and until they come back down, mortgage rates will stay at today’s higher levels,” Cohn said. “Let’s just hope that they don’t go even higher.”

Shmuel Shayowitz, president and chief lending officer for Approved Funding Corp., said that he’s watching for markets to react to the “change of the guards” at the Fed.

“On Wednesday, Fed Chair Powell will likely be presiding over his last FOMC meeting. I don’t anticipate any moves by the Fed at that meeting, and his post-meeting comments will likely not mean much this time,” Shayowitz said.

Shayowitz said that he believes the current rate is “more reflective of FOMC positioning” than anything else, and that he expects lower rates in the second half of this year.

“It is now becoming very evident that a Warsh-led Fed will bring significant change per his testimony at the Senate Banking Committee,” he added. “Warsh noted that he would [be] willing to meaningfully reduce the central bank’s balance sheet and reconsider how inflation is calculated and the impact it might have on future Fed decisions on monetary policy.”