Welp, I’ve been warning people and here we are. The new 2026 30-year adjusted high.
Sooner or later, the protracted Iranian conflict would catch up with us.
You can’t have $100 a barrel of oil and not expect inflation to rise, which means higher bond yields and higher mortgage rates.
So after last month’s suspiciously low interest rates and change, we’re going up again.
The next logical question is how mortgage rates might go before we get relief again.
30-Year Fixed Hits New Highs for the Year
At a glance, the 10-year bond yield rose 12 basis points on the day due to the ongoing conflict in the Middle East.
Although we were promised a quick decision for a few weeks, we failed.
In the meantime, we have seen hot reports of inflation, be it CPI or PPI.
There’s just no way around it when oil has an even price of over $100 per barrel. It’s not just fuel prices. Oil affects everything we buy.
Adding to the worries is President Trump’s visit to China with leader Xi Jinping and fears that a conflict with Taiwan could break out.
That could turn the current conflict into a wider, global test, though for now that’s just talk.
Nevertheless, it is clear that the situation in Iran is reason enough for bond yields to be higher and for inflation fears to be fully revived.
That means only one thing about mortgage rates. The highest! Bonds defy inflation and if it is expected to rise again, of course, your 30-year fixed income rate is.
How Much Will Mortgage Rates Go Down?
The next question to ask yourself, since it’s clear that mortgage rates are now on the rise, is how high?
How high can they go before things are right again? And when will they reverse course?
Well, I already said that they will go up. I was honestly surprised they stayed down as long as they did.
I think a lot of people were hoping we could get a peace deal. Iran had other ideas.
But now it seems the truth is setting in. Today, the 30-year fixed rate could match its 2026 high of 6.625%.
From there, we could go to 6.75%, 6.875%, and dare I say the 7 handle before things peak.
That was once unthinkable, as it seemed that those “high prices” were behind us. But now it’s just a little bit.
It really depends on what happens in the dispute and if the economic data continues to come in hot.
I have said several times that loan rates are higher in May and June, historically.
So if they get to the top of the year this month and next it will be great.
The good news is that I think we are finally getting a solution and things are on track, probably before midterms in November.
Not because of that election, but because enough time will have passed to be able to find some kind of political solution.
And if we’re talking about time, mortgage rates tend to be the lowest in the winter, so maybe they peak in the summer, and then start to drop later in the year.
The bad news is that they will likely throw cold water on the spring housing market and it will be another bad year for home sales, which have been stuck in a 30-year slump for the past few years.
Before creating this site, I worked as an account manager for a real estate broker in Los Angeles. My experiences in the early 2000s inspired me to start writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the mortgage process. Follow me on X for the hottest.
