A report released by Freddie Mac on Thursday (October 9) showed that U.S. mortgage rates continued to climb this week, with the average 30-year fixed rate reaching 7.4% for the first time since November 2023. Affected by the ongoing U.S.-Iran conflict and a sell-off in global bond markets, investors are withdrawing from the bond market due to persistent inflation and high oil prices, leading to a surge in mortgage borrowing costs.

The 30-year mortgage rate rose to 7.4%, marking its seventh consecutive week of increase.

A report from Freddie Mac on Thursday showed that mortgage rates climbed again this week, with the average 30-year mortgage rate hitting 7.4% for the first time since November 2023. The government-backed corporation said the average 30-year mortgage rate rose 12 basis points from 7.28% last week. This marks the seventh consecutive week of increases and the third consecutive week above 7%—the first such sustained trend since April-May 2024. The last time it reached 7.4% was in mid-November 2023, when the average 30-year rate was 7.44%. This continued upward trend indicates that the mortgage market is under pressure from both the bond market and inflation expectations.

The conflict in Iran and bond sell-offs pushed up borrowing costs, with the 10-year yield rising by 130 basis points.

The ongoing conflict between the US and Iran has triggered a sell-off in global bond markets, with investors withdrawing from bonds due to persistent inflation and high oil prices, causing mortgage borrowing costs to surge. A week before the US and Israeli attacks on Iran, the average 30-year mortgage rate was 142 basis points lower than the level recorded by Freddie Mac this week. The 10-year US Treasury yield also rose after the conflict, increasing by 130 basis points from the day before the conflict began until Wednesday's close. This data indicates that the Iranian conflict has directly pushed up US mortgage costs through energy prices and the bond market, putting pressure on the housing market.

Trump had promised to lower interest rates to 3%, but they are currently much higher.

During his 2024 presidential campaign, Trump promised to lower mortgage rates for Americans, predicting they would fall to 3% by the time he was in a second term. In September 2024, at the Economic Club of New York, he stated, “Young people will be able to buy homes again and be part of the American Dream,” when Freddie Mac data showed the average 30-year mortgage rate was 6.35%. As mortgage rates climbed throughout the spring, summer, and early fall, the president repeatedly pointed the finger at the Federal Reserve—which raised rates by 25 basis points last month. Trump further pressured the central bank on Wednesday, saying it “wants to see the country perform poorly,” while praising Fed Chairman Warsh as “great.” Later that day, the president acknowledged that rising mortgage rates were impacting the housing market but predicted rates would fall once the conflict ended and oil prices dropped. He told reporters, “It hurts housing, but when oil prices go down, rates go down. Once we resolve Iran, oil prices will go down, and very quickly.”

The end of the conflict and a decline in oil prices are key prerequisites for a decrease in interest rates.

Trump directly linked declining mortgage rates to the end of the conflict and a drop in oil prices, stating, "Once we resolve Iran, oil prices will fall, and very quickly." This statement indicates that the White House believes the main driver of current rising mortgage rates is the Iranian conflict pushing up inflation and bond yields through energy prices. Brent crude is currently trading above $103 per barrel. If the conflict ends and oil prices fall, mortgage rates may subsequently decline; if the conflict continues and oil prices remain high, mortgage rates may continue to be under pressure. This logic directly links the housing market outlook to Middle Eastern geopolitics.

Summarize

The average 30-year mortgage rate rose to 7.4%, the first time since November 2023, marking its seventh consecutive week of increase and the third consecutive week above 7%. The conflict with Iran and a global bond sell-off have pushed up borrowing costs, with the 30-year rate now 142 basis points higher than before the conflict, and the 10-year Treasury yield rising by a cumulative 130 basis points. Trump had promised to lower interest rates to 3%, which are currently far above that level. He has repeatedly criticized the Federal Reserve and linked lower interest rates to the end of the conflict and a drop in oil prices. Going forward, attention should be paid to whether the Iranian conflict ends, the trend of oil prices, whether the bond market sell-off can be alleviated, the Federal Reserve's policy path, and the reaction of the housing market. If the conflict ends and oil prices fall, mortgage rates may decline; if the conflict continues and oil prices remain high, interest rates may continue to be under pressure. The outlook for the housing market is directly tied to Middle Eastern geopolitics, and the timing of the conflict's resolution will be a key variable.