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Rates Hit 7-Month High Amid Market Turmoil
Mortgage rates have climbed to their highest levels in seven months as the ongoing war with Iran sends shockwaves through global financial markets . The average 30-year fixed mortgage rate now stands at 6.47%, up sharply from 4.83% at the start of March, according to Moneyfacts data . That’s the highest since July 2024 .
The 15-year fixed mortgage is averaging 5.90%, while 20-year loans are at 6.50% and 5/1 adjustable-rate mortgages are at 6.71% . Refinance rates are slightly higher, with the average 30-year refi at 6.60% .
| Loan Type | Current Rate |
|---|---|
| 30-Year Fixed | 6.47% |
| 15-Year Fixed | 5.90% |
| 20-Year Fixed | 6.50% |
| 5/1 ARM | 6.71% |
| 30-Year VA Loan | 5.99% |
📉 First-Time Buyers Hit Hardest
The surge has been especially brutal for first-time buyers. Since March 6, more than 200 low-deposit mortgage deals have been pulled from the market—the biggest daily withdrawal since the 2022 mini-Budget . For borrowers with just 5% down, the average two-year fixed rate has climbed above 6%, making such a deal roughly $1,200 more expensive annually than at the beginning of March (based on a $250,000 loan over 25 years) .
“The harsh reality for first-time buyers is an average interest rate of more than 6% on two-year mortgages when borrowers can only offer a 5% deposit,” said Rachel Springall of Moneyfacts .
🛢️ Iran War Fueling Volatility
What’s driving the spike? The US-Israel war with Iran that began February 28 has upended financial markets. Before the conflict, markets expected interest rate cuts this year, which was pushing mortgage rates down . Now, the uncertainty has reversed that trend.
“Rate increases are coming thick and fast,” said Aaron Strutt of broker Trinity Financial. Lenders are finding it “almost impossible” to price their mortgages, with the cheapest rates having a “shelf life of three or four days” .
A 30-year fixed mortgage is now $185 more per month on the median-priced home with 10% down compared to early March, according to Realtor.com data .
🛡️ What Borrowers Can Do
With rates likely to remain volatile as long as the conflict continues, experts suggest several strategies:
Adjustable-rate mortgages (ARMs) are seeing a renaissance. They now account for more than 8% of all mortgage applications nationally—and over 31% in high-cost markets like California . A 5/1 ARM currently offers roughly $185 in monthly savings compared to a 30-year fixed, though borrowers face the risk of rates adjusting upward after the introductory period .
Rate buydowns allow borrowers to pay upfront for a lower rate in the initial years. With a 2-1 buydown, a 6.50% mortgage would drop to 4.50% in year one and 5.50% in year two . These can be especially attractive when using seller concessions.
Work with a trusted lender. “Find someone who takes the time to talk with you about your situation,” said Dave Nichols of NBKC Bank .
🔮 Looking Ahead
“Let’s hope the talk of an easing in the conflict takes shape which should help the market find a level,” said David Hollingworth of broker L&C . Until then, borrowers should expect “a turbulent period” for mortgage rates .
For those who can wait, the Federal Reserve is still expected to cut rates later this year if the conflict de-escalates. But for now, buyer confidence has been “shaken” by the rapid shift in borrowing costs .
