US Mortgage Rates Rise Amid Iran Conflict, Increasing Borrowing Costs

The ongoing conflict with Iran has led to higher mortgage rates in the United States, raising borrowing costs for consumers. As of April 2, 2026, the average 30-year fixed mortgage rate climbed to 6.46%, marking the highest level in nearly seven months.

Mortgage rates are closely tied to the 10-year U.S. Treasury yield, which has risen due to investor concerns over escalating oil prices and potential inflation stemming from the conflict. The 10-year Treasury yield increased from below 4% at the end of February to approximately 4.3% in early April.

The rise in mortgage rates translates to higher monthly payments for homebuyers. For instance, a $500,000 home with a 20% down payment would have a monthly principal and interest payment of about $2,500 at a 6.46% interest rate, compared to approximately $2,400 at a 5.98% rate, resulting in an additional $100 per month.

Auto loan rates have also been affected. The average rate for a five-year auto loan is around 7%, leading to monthly payments of approximately $594 on a $30,000 loan.

Credit card interest rates remain elevated, with the average annual percentage rate (APR) above 19%. The Federal Reserve's decision to hold interest rates steady amid the conflict suggests that credit card rates are unlikely to decrease in the near future.

Economists warn that a prolonged conflict could further impact borrowing costs. Jeffrey Roach, chief economist at LPL Financial, stated, "Investors are now coming to grips with the likelihood of a prolonged war with Iran and what that would mean for the economy."