Mortgage Interest Rates Today: Rates Surge to 6.38% as Oil Shock Roils Financial Markets

Mortgage rates jumped Thursday to their highest level in more than six months, as the U.S.-Israeli war with Iran continues to drive elevated oil prices and raises new risks of inflation.

The average rate on 30-year fixed home loans climbed to 6.38% for the week ending March 26, up 16 basis points from 6.22% the week before, according to Freddie Mac. For perspective, rates averaged 6.65% during the same period in 2025.

“The housing market continues to show gradual improvements compared to a year ago amid recent rate volatility," said Sam Khater, Freddie Mac's chief economist. "Purchase and refinance applications are up year-over-year, and rates remain lower than last year when they averaged 6.65%.”

However, it marked the biggest weekly increase for mortgage rates in more than a year, as financial markets continued to be roiled by volatility related to the conflict in the Middle East.

This week, Tehran publicly rejected a U.S. proposal to pause the war and open negotiations. Meanwhile Iran has kept up missile and drone attacks on regional targets in the Gulf while severely curtailing cargo traffic through the critical Straight of Hormuz.

On Thursday morning, Brent crude, the international benchmark for oil pricing, was at $107 per barrel, down slightly from recent highs but still well above prewar prices of around $70.   

"Crude oil futures have leveled off in the past week, ending their rapid ascent, but prices remain much higher than they were before the launch of the conflict," says Realtor.com® Senior Economist Joel Berner. "Energy prices ripple through the rest of the economy, as they impact the cost to produce and deliver any physical good."

The oil price shock stacks on top of disappointing inflation data released in recent weeks, which showed that progress toward the Federal Reserve's 2% target is beginning to falter. Financial markets are now writing off a rate cut in 2026 as unlikely, as inflation pressures force the central bank to reassess policy.

As a result, mortgage rates have bounced sharply off the three-year low of 5.98% reached in late February and now appear to be quickly destined to reach 6.5% or higher in the coming weeks.

"Rising mortgage rates are a major barrier to what should otherwise be a very favorable spring homebuying season," says Berner. "The inventory of homes for sale is up, prices are down, and the best time of year to sell a home is approaching."

Still, Berner notes that even before the war in Iran was launched, home sales activity in 2026 has been muted, with new-home sales down sharply in January and existing-home sales lagging annually in Feburary.

The early-year slowdown occurred when mortgage rates were falling, suggesting that buyers were facing a crisis of confidence even before the war raised new concerns about the path of the economy.

"Ultimately, the current upward pressure on mortgage rates, stemming from the war and inflation fears, serves as the primary barrier preventing the spring housing market from capitalizing on otherwise favorable inventory and price conditions," says Berner.

How mortgage rates are calculated

Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.

When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to increase. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates to fall.

The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account.

Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.

How your credit score affects your mortgage

Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you'll receive. The higher the credit score, the lower the interest rate you'll qualify for.

The credit score you need will vary depending on the type of loan. A score of 620 is a "fair" rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.

Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.

Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. Ultimately, they want to make sure you're able to pay back the loan.