Does Rate Spike From 6% To 6.625% Derail 2026 Homebuying?
Mortgage rates are up .625% since Iran war began February 28. Even with this rise, rates are still down .625% since early-2025. And YoY home prices are flat, helping buyer affordability.
Mortgage rates are up .625% since the Iran war began February 28 (per Mortgage News Daily). Even with this rise, rates are still down .625% since early-2025. But what do you do if you’re buying or refinancing right now?
Right now, the biggest risk is rates rising more as mortgage bonds sell off to price in oil-driven inflation risk. Market trading will always move way ahead of the Fed, and markets are now pricing in a 32% probability of a 25 basis point Fed hike by October 28 to quell inflation (per CME).
When short-term market volatility hits like this, it’s best as an active homebuyer or refinancer to lock your rate to protect your budget from further rate rises.
If rates drop immediately after you lock, most lenders have rate lock renegotiation policies that allow you to capture about half of those drops.
As for the medium-term on rates, if the war ends in a reasonable time, current inflation and jobs data (Core CPI 2.5%, Core PCE 2.8%, Unemployment 4.4%) are all in the Fed’s comfort zone of NOT raising rates.
But as noted above, the rate market never waits for the Fed, so homebuyers and refinancers right now should strongly consider locking rates.
As for the medium-term on home prices, rates in today’s 6.625% range are still .625% lower than last year, and home prices are flat at 0.4% appreciation since this time last year (ICE), with home price appreciation slowing in 70% of U.S. markets since December.
And (per ICE) annualized prices are coming down slightly in cities like:
– Seattle, WA (-2.3%)
– Stockton, CA (-2.3%)
– Deltona, FL (-2.3%)
– Houston, TX (-2.3%)
– Palm Bay, FL (-2.5%)
– Colorado Springs, CO (-2.6%)
– Denver, CO (-2.7%)
– Jacksonville, FL (-2.7%)
– Tampa, FL (-2.9%)
– Dallas, TX (-3.0%)
– San Antonio, TX (-3.4%)
– Lakeland, FL (-4.1%)
– Austin, TX (-5.3%)
– North Port, FL (-5.3%)
– Cape Coral, FL (-7.2%)
Flat or select lower home prices means relief for buyers without a crash for sellers.
Key Takeaway: even slight declines are used as Gloom Headline fodder, but if you’re a buyer, this helps affordability.
As for the system overall, even with national home prices basically flat, ICE also reports we’re still close to near-record equity of $17 trillion in the U.S. housing market, of which $11 trillion can be tapped and still leave 20% equity left in the system overall.
As for the rate outlook in a war context, U.S. mortgage rates have spiked more sharply to get ahead of a potentially longer conflict with Iran. But rates will recover just as quickly when the conflict starts to wane.
Please reach out if you have any questions.
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* NOTE: MND rates show 6.5% as of today (Friday 3/20/26), but my comments bake in an extra .125% on top of this because the selloff in mortgage bonds (tracked by MND sister site MBS Live) is so sharp today, it’s likely lenders will adjust more by Monday.