Interest rates are at their highest levels since late December, leading to slower mortgage market activity, according to new industry data released on Wednesday.
For the week ending March 18, the average contract rate on 30-year fixed-rate mortgages rose to 6.3 percent, according to the Mortgage Bankers Association. This is up from 6.19 percent the previous week.
Despite the increase, the 30-year rate is still down from last year’s 6.72 percent.
Mortgage rates typically track the U.S. Treasury market, particularly the yield on the benchmark 10-year government bond.
Even as Wall Street experiences jitters while traders seek shelter in safe‑haven assets amid the war in Iran, yields have shown little sign of retreating this month.
“The story in the markets is still being driven almost entirely by what’s happening in the Middle East and the impact it’s having through elevated and volatile oil prices,” Jeff DerGurahian, head economist and CIO at loanDepot, said in a note emailed to The Epoch Times.
“We saw a meaningful backup earlier this week as long-term yields moved higher, with mortgage rates rising more than Treasury yields would typically imply.”
The 10-year yield firmed above 4.22 percent at midweek, while the 30-year remained above 4.86 percent. Short-term rates ticked up on a hotter-than-expected wholesale inflation report.
Investors pared their forecasts for monetary policy in 2026 following the latest economic data.
Officials continue to wrestle with the dual mandate—maximum employment and price stability—being under threat simultaneously.
“When it comes to the Federal Reserve, policy expectations have taken a back seat to geopolitics, and the Fed is expected to hold rates steady at its meeting this week,” DerGurahian added.
Mortgage Activity Mixed
Total mortgage application volumes declined almost 11 percent from the week before.This past week’s jump in interest rates forced homeowners seeking to lower their payments to hit the pause button as refinance demand plummeted 19 percent.
“Rates were around 20 basis points higher than they were two weeks ago, and this caused a reversal in refinance activity, particularly for conventional refinance applications,” said Joel Kan, deputy chief economist and vice president of the Mortgage Bankers Association, in a news release.
But prospective homebuyers continue to navigate the U.S. real estate market amid more supply and lower home prices.
Applications for home loans rose 2 percent, association data showed.
“Overall purchase applications remained ahead of last year’s pace, continued to be supported by higher inventory and slowing home-price growth in many markets,” Kan added.
Modest housing demand is appearing in other sector metrics.
Existing home sales advanced nearly 2 percent last month to a higher-than-expected annualized rate of 4.09 million. Pending home sales also increased for the first time since November, rising 1.8 percent in February.
Improved affordability conditions are stimulating demand, says Lawrence Yun, the National Association of Realtors’ chief economist.
The median sales price in February was $429,226—little changed from a year ago—according to online real estate platform Redfin.
“The slight gain in pending contracts appears to be driven by improved affordability conditions. However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates,” Yun said in a March 17 news release.
“The Midwest—the most affordable region of the country—was the strongest performer in February. But the Northeast was held back by a combination of higher home prices and a shortage of supply.”
The three-week-old Iranian conflict has caused a spike in global energy markets.
U.S. crude oil prices rallied 3 percent midweek to around $99 per barrel. This is impacting motorists, as the national average for a gallon of gasoline rose to $3.84.
