Mortgage rates dip as Middle East ceasefire cools investor fears

The ceasefire in the Middle East that runs until April 22 has temporarily put the brakes on rising mortgage rates, but returning the cost of a home loan closer to a 6% anytime soon is contingent on a long-term resolution between the U.S. and Iran.

Mortgage News Daily reported Monday that 30-year fixed rates averaged 6.43%, down 4 basis points in the past week. MND rates are based on best-execution pricing from lender rate sheets.

HousingWire’s Mortgage Rates Center, which analyzes locked loans across all borrower credit profiles, showed that 30-year conventional loan rates were at 6.47% on Tuesday, down 5 bps from one week ago. Rates for 30-year mortgages backed by the Federal Housing Administration (FHA) dropped 3 bps during the week to 6.18%, while rates for 30-year jumbo loans rose 4 bps to 6.33%.

Melissa Cohn, regional vice president at William Raveis Mortgage, said in written commentary that the war in Iran is having “far-reaching effects” that include the housing market.

She also noted that last week’s Consumer Price Index data, which showed rising annual inflation of 3.3% in March, and downward revisions to year-end 2025 gross domestic product growth figures, are illustrative of a slowing economy. But these factors aren’t expected to influence the Federal Reserve to cut rates at the end of April.

“Where oil goes is where mortgage rates and the rate of inflation will go,” Cohn said. “So, if this cease-fire actually holds, and they can resolve and end the war and oil prices settle back down, then rates will come back down.”

The CME Group’s FedWatch tool shows that 99.5% of interest rate traders are expecting the Fed to hold rates steady this month. The vast majority of traders anticipate the federal funds rate to stay at its current range of 3.5% to 3.75% through the end of 2026, with the share who predict a cut rising to a peak of only 26% in December.

Housing market response

In this week’s Housing Market Tracker, HousingWire Lead Analyst Logan Mohtashami wrote that softening conditions are most visible in shrinking levels of for-sale inventory. At its peak last year, inventory growth reached 33% year over year, but it slowed to 3.21% as of last week. Figures could move into negative territory in the near future, he added.

But a silver lining is also present in the form of lower mortgage spreads, which dropped from 2.11% to 2.05% over the past week. The difference between the 10-year Treasury rate and the 30-year mortgage rate was significantly higher in each of the past three years, meaning that mortgage rates could be between 6.88% and 7.45% today if the same spreads existed.

Still, prospective homebuyers have significant headwinds in their purchase journey, as indicated by the University of Michigan’s Consumer Sentiment Index for April. The initial index reading of 47.6 for this month was down significantly from March and represented the lowest level in the 70-plus-year history of the survey, according to reporting by The Wall Street Journal.

Data released Tuesday by Optimal Blue showed positive momentum in the mortgage market last month. Rate-lock volume for March was up 13% from February and 26% higher on an annualized basis. The company reported that purchase loans were leading that growth as refinance activity has waned in the face of higher rates.

“Purchase demand is carrying the market forward even as rates move higher,” said Mike Vough, Optimal Blue’s senior vice president of corporate strategy. “That’s a strong sign for the spring market, especially with the refinance share still at 28%, well above where it spent most of 2025.”

But mortgage application data, a leading indicator for closed loans and home sales, continues to trend lower, with the Mortgage Bankers Association’s latest purchase index down 7% year over year without accounting for seasonal adjustments.

“For the spring season to truly break out, instead of just policy announcements, we will need more policy stability,” said Lisa Sturtevant, chief economist for Bright MLS. “Until there is a clearer resolution to the international conflict and energy prices stabilize, both buyers and sellers will likely remain in ‘wait-and-see’ mode.”