Freddie Mac's report released on Thursday (October 9) showed that US mortgage rates continued to climb this week, with the average 30-year fixed rate touching 7.4% for the first time since November 2023. Affected by the ongoing US-Iran conflict and a global bond market sell-off, investors have been retreating from the bond market amid stubborn inflation and elevated oil prices, driving up the cost of housing loans.
30-Year Mortgage Rate Rises to 7.4%, Up for Seven Consecutive Weeks
Freddie Mac's Thursday report showed that mortgage rates climbed again this week, with the average 30-year rate touching 7.4% for the first time since November 2023. The government-sponsored enterprise said the average 30-year mortgage rate rose 12 basis points from 7.28% last week. The rate has now risen for seven consecutive weeks and has stayed above 7% for three straight weeks — the first such sustained stretch since April to May 2024. The last time it reached 7.4% was in mid-November 2023, when the average 30-year rate stood at 7.44%. This sustained upward trend shows that the mortgage market is under dual pressure from the bond market and inflation expectations.
Iran Conflict and Bond Sell-Off Push Up Borrowing Costs, 10-Year Yield Rises 130 Basis Points
The ongoing US-Iran conflict and a global bond market sell-off have driven investors away from bonds amid stubborn inflation and high oil prices, sending housing loan borrowing costs soaring. In the week before the US and Israel attacked Iran, the average 30-year mortgage rate was 142 basis points lower than the level Freddie Mac recorded this week. The 10-year US Treasury yield also rose after the conflict, climbing a cumulative 130 basis points from the day before the conflict broke out to Wednesday's close. These figures indicate that the Iran conflict has directly pushed up US mortgage costs through energy prices and the bond market channel, putting pressure on the housing market.
Trump Once Promised Rates Would Fall to 3%, Current Level Far Above That
During the 2024 presidential campaign, Trump promised to lower mortgage rates for Americans, predicting they would fall to 3% during his second term. Speaking at the New York Economic Club in September 2024, he said: "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 at 6.35%. As mortgage rates climbed through spring, summer, and early autumn, the president repeatedly pointed the finger at the Federal Reserve — which raised rates by 25 basis points last month. Trump applied further pressure on Wednesday, saying the central bank "wants to see the country do badly," while praising Fed Chairman Warsh as "great." Later that day, the president acknowledged that rising mortgage rates were hitting the housing market but predicted rates would fall once the conflict ends and oil prices retreat. He told reporters: "It's hurting housing, but when oil prices come down, rates will come down. Once we solve Iran, oil prices will drop, and very quickly."
End of Conflict and Falling Oil Prices Are Key Prerequisites for Lower Rates
Trump directly linked lower mortgage rates to the end of the conflict and falling oil prices, saying "once we solve Iran, oil prices will drop, and very quickly." This statement indicates that the White House believes the main driver of the current rise in mortgage rates is the Iran conflict pushing up inflation and bond yields through the energy price channel. Brent crude is currently trading above $103 per barrel. If the conflict ends and oil prices retreat, mortgage rates may decline; if the conflict persists and oil prices remain high, mortgage rates may continue to face pressure. This logic directly ties the housing market outlook to Middle East geopolitics.
Summary
The average 30-year mortgage rate has risen to 7.4%, the first time since November 2023, up for seven consecutive weeks and above 7% for three straight weeks. The Iran conflict and global bond sell-off have pushed up borrowing costs, with the 30-year rate 142 basis points higher than before the conflict and the 10-year US Treasury yield up a cumulative 130 basis points. Trump once promised to bring rates down to 3%, and the current level is far above that. He has repeatedly blamed the Federal Reserve and linked lower rates to the end of the conflict and falling oil prices. Going forward, attention should be paid to whether the Iran conflict ends, oil price trends, whether the bond market sell-off eases, the Fed's policy path, and the housing market's response. If the conflict ends and oil prices retreat, mortgage rates may decline; if the conflict persists and oil prices remain high, rates may continue to face pressure. The housing market outlook is directly tied to Middle East geopolitics, and the timing of the conflict's resolution will become a key variable.