Mortgage rates are surging, foiling homebuyers' best-laid plans

Updated on: April 2, 2026 / 5:33 PM EDT / CBS News
As of Thursday, the 10-year Treasury yield was 4.26%, up from 3.96% just before the U.S.

and Israel attacked Iran on February 28.

"When inflation goes up, investors in bonds — and that includes mortgage-backed securities — demand a higher return to compensate them for that increase," explained Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA), a trade group.

The direction of monetary policy is also weighing on the housing market, Fratantoni said.

With inflation seemingly stuck above the Federal Reserve's 2% annual target, a growing number of economists and Wall Street analysts now predict that the central bank will refrain from lowering its benchmark rate for all of 2026.

"Mortgage rates will remain elevated, above 6%, in part because markets are pricing higher expected inflation into long-term rates," economists with PNC Financial Services predicted in a report this week.

A lender initially quoted her a rate of 5.85% for a 30-year fixed-rate mortgage, she told CBS News.

But before she and her husband could jump on the offer, the Iran war erupted.

The lender's latest quote: 6.49%.

"You feel like you're finally going to be entering the market when things are going your way.

Like, rates are finally going down, we can actually afford a nice house," she said.

"And then it's like, oh, wait, never mind."
If the couple locks in at 6.49% and put 20% down, they would pay an extra $265 per month compared with the lower rate offer last month, according to Realtor.com.

That comes to $95,400 over the life of a 30-year loan.

The housing market was also eager to turn the page from last spring's buying season, when President Trump's "liberation day" tariffs sparked inflation and recession fears, according to Jake Krimmel, a senior economist at Realtor.com.

"This was going to be the year that the market rebounded in a noticeable way," he told CBS News.

"Conditions were forming for improved affordability."
However, higher mortgage rates have muddied the picture, with Oxford Economics noting in a recent report that the Iran war's effect on the housing market "will likely send many buyers and sellers to the sidelines."
Krimmel said it's too soon to tell if higher mortgage rates will chill demand for housing, noting that "nothing is flashing red yet." In some cases, rising mortgage rates could even encourage people to jump on an offer to lock in a better deal before costs rise, he added.