Mortgage rates have had one of their best two-week spells in a long time.
And they’ve done it during one of the most uncertain times in years, with a war raging in the Middle East.
Despite oil priced near $100 per barrel, the 30-year fixed remains priced near its lowest level in years.
Not quite as low as it was at the end of February, but not much higher either.
The big question is can rates hold here, or even improve, without slipping back toward the 7s again?
Why Did Mortgage Go Up? And Why Did They Fall Again?
First, a quick summary. Mortgage rates were sub-6% at the end of February, their lowest point in roughly 3.5 years.
Then we got the unexpected strikes in Iran that took out the country’s leadership and led to a wide-scale conflict in the Middle East.
That led to spiking oil prices as the Strait of Hormuz shuttered to virtually all tanker traffic, pushing mortgage rates back up to around 6.625%.
It was a very fast and steep move higher basically throughout the month of March.
However, as talks of a ceasefire surfaced, mortgage rates began to ease and have since fallen about 0.25% in the past two weeks.
Mortgage Rates Don’t Change on Weekends, But Talks This Weekend Will Play a Major Role in Their Next Move
Mortgage rates don’t change during the weekend, but what takes place this weekend could have a big impact on which way rates go next week and beyond.
Pakistan facilitated a crucial two-week ceasefire between the United States and Iran earlier this week, and will be hosting talks on Saturday.
Hence why this weekend will matter so much to mortgage rates.
If those talks go well, mortgage rates could extend their rally next week, potentially falling to 6.25% or even lower.
If those talks don’t go well, or if something else comes up during the weekend, such as another attack or escalation, or new threat, mortgage rates may break their winning streak.
It’s all very tenuous as both sides seem to want a lot of concessions to end this thing.
Both apparently want an exit-ramp, but only on their terms. And both will want to feel like they “won” in order to move on.
Chances of Another Escalation Are High
Not to be pessimistic, but relations between these countries have always been tumultuous.
And if history is any guide, things could get worse before they get better.
I asked Grok what the chances of an escalation were and it said about 40-60% at this juncture.
It also noted that during past “serious negotiations or ceasefires between Iran and the U.S./Israel over the past 15+ years, low-level or proxy incidents have continued or even spiked.”
So to think all will be hunky-dory seems a bit too optimistic, as much as we all want peace and a lasting solution.
Even if things do go well at the meeting, it’s going to take a long time to sort everything out and get back on track.
Chances are the disruptions to date will result in increased inflation and elevated gas prices for months to come.
Gas Prices Are Quick to Rise, Slow to Fall (Like Mortgage Rates)
Like mortgage rates, gas prices are quick to rise and slow to fall. Funny how that works isn’t it?
Likewise, don’t expect mortgage rates to keep falling, even if we get more good news.
Any little thing could set them off again and result in a re-test of recent levels or even higher.
I still believe we see mortgage rates climb back toward 6.75% or possibly above that in coming months.
Partially because historically mortgage rates are highest in the months of May and June.
And also because this is a very delicate situation that doesn’t seem like it’ll be resolved quickly.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.