This week, mortgage rates jumped back up over 6% because of the war in Iran and renewed concerns about inflation. They had recently fallen below 6% to their lowest level in a few years.
Sudden conflict and uncertainty almost always cause volatility in the mortgage market. But you can’t always know in advance whether the effect will be negative or positive, cautioned Redfin chief economist Daryl Fairweather.
“Fear of higher inflation because of higher oil prices tends to push rates up, but fear about global stability and economic growth tends to push rates down,” she said.
This time, so far, concerns about rising oil prices seem to be winning out, said Susan Wachter, a professor of real estate at the University of Pennsylvania’s Wharton School.
“A key price for the inflation rate is oil. If oil markets are destabilized, as they are right now, and if oil prices [if] their significant increase continues, this is clearly going to raise the inflation rate,” she said.
Fear of that happening is what has pushed the yield on 10-year Treasury bonds up and mortgage rates up along with it.
But there are other factors at play, too, Fairweather said. “We’re going to get some economic data later this week about what’s happening in the labor market, what’s happening with retail spending.”
And that data could have as much or more of an impact on mortgage rates than the conflict in the Middle East, she added.
