March 06, 2026 – The brief window of sub-6% mortgage rates has already closed. Geopolitical turmoil in the Middle East pushed borrowing costs higher this week. The average 30-year fixed rate returned to 6%, according to Freddie Mac data released Thursday.
The reversal came swiftly. Just last week, rates had dipped to 5.98%. That marked the first drop below 6% since 2022. Many analysts viewed it as a potential turning point for housing demand.
However, military strikes involving the US and Israel in Iran changed the calculus. Treasury yields, which heavily influence mortgage pricing, climbed sharply. Notably, bonds failed to attract the typical safe-haven flows seen during past conflicts.
Affordability Gains Under Pressure
The upward move in rates remains modest so far. Still, a prolonged conflict could trigger a broader sell-off in bonds. Rising oil prices may also fuel inflation, further threatening the recent downward trend in mortgage costs.
Even so, conditions have improved compared to early 2025. Rates briefly topped 7% at the start of last year. Zillow estimates buyers now enjoy roughly $30,000 more in purchasing power year-over-year.
Meanwhile, the housing market remains stubbornly frozen. Home sales fell 8.4% in January, per the National Association of Realtors. Millions of homeowners locked into pandemic-era rates below 4% continue to resist selling.
What Comes Next
The so-called lock-in effect shows no sign of easing. A sustained return to the 5% range could loosen inventory. But escalating geopolitical risks make that timeline uncertain. Median home prices have risen for 31 consecutive months.
For prospective buyers, the message is mixed. Borrowing costs are lower than a year ago. Yet the Iran conflict introduces fresh volatility. The bond market’s next moves will shape the path to affordable housing.
