Why Mortgage Rates Are Going Up in 2026 (Oil Prices and Inflation Explained)

I had to do a double take when I looked at the price per gallon at the pump.

Over $5.00?!

Ouch.

So back February 28th I uploaded a video to YouTube titled “War With Iran: What it Means for Homebuyers and Rates”

While the video was shot on a Saturday, I took my best guess on what war with Iran could mean for mortgage interest rates in both the short, and long term.

In the video I explain how global and economic uncertainty typically creates a flight to safety, where investors purchase mortgage bonds given their low risk while markets kind of figure it out in a wait and see approach.

Usually (heavy emphasis on usually) this helps mortgage rates go lower.

In the video I discuss the “one thing” to look out for the Strait of Hormuz, given the fact that 20% of the world’s oil supply flows through this narrow channel.

The Strait has now been closed since February 28th, and if you go back to that day, a barrel of oil according to the U.S. Energy Information Administration averaged roughly $71.00 per barrel.

Today, after nearly three weeks of closure and what appears to be no end in sight, oil is trading at around $102 per barrel a whopping 43% increase.

Ouch.

Which could only mean one thing…

That’s right — inflation.

Mortgage bonds hate inflation.

Why?

Because inflation erodes returns for investors. As a result, lenders must increase mortgage rates to ensure their returns stay in line with future inflationary pressures that present themselves.

So, what does this mean for rates, and how much have they gone up?

According to Mortgage News Daily’s mortgage rate index, the average 30-year fixed mortgage rate was about 6% before the disruption in late February. Since then, it’s climbed to roughly 6.24%, an increase of about 24 basis points (roughly .25%) in just a couple of weeks.

The impact?

About $79 per month on a $500,000 loan.

Enough to push a would-be buyer off the sidelines?

Maybe.

Let’s hope not.

Silver lining?

As of the time of writing this article, Treasury Secretary Scott Bessent was quoted this morning on CNBC stating that once conditions stabilize he expects oil prices to be much lower than $80 per barrel, suggesting the current spike may be temporary.

Let’s hope he’s right.

We’ve had too much momentum with rates dipping to their lowest levels in nearly four years to give all that up for prospective homebuyers.

Here if you need me.