Mortgage rates jump sharply higher after Iran strikes, reversing last week’s decline

Mortgage rates reversed course on Monday, hitting a two-week high after falling below 6%, a multi-year low.

The average rate on the popular 30-year fixed loan rose 13 basis points to 6.12%, according to Mortgage News Daily. It dropped to a recent low of 5.99% on February 23 and remained at that level for almost the entire week.

This decline was welcome news as the all-important spring housing market began. Potential buyers have been sidelined by concerns about high home prices and the overall economy. The fact that mortgage rates moved to the 5 percent range broke the emotional barrier for some and signaled that buyers could take advantage of this opportunity.

Mortgage rates loosely track the U.S. 10-year Treasury yield, which rose above 4% again on Monday. The escalating conflict with Iran has caused a rise in oil prices, raising inflation concerns and pushing yields higher.

But oil prices may not be what’s driving mortgage rates up, according to Matthew Graham, chief operating officer of Mortgage News Daily.

“In fact, bonds were trading flat until 7 a.m. compared to the CME close at 3 p.m. on Friday. By then, oil had already experienced nearly all of its intraday swings,” Graham said in emailed comments to CNBC. he said. “The crux of the bond sell-off occurred in a vacuum; it CERTAINLY suggests that Friday’s yields were pulled down by end-of-month buying and this morning’s sell-off is ‘new month’ positioning.”

That underscores the possibility that the bond market will view Monday’s move as a technical bounce at 4% in 10-year Treasuries, Graham said. That means it may be harder for rates to move lower without meaningful motivation from economic data in abundance this week, including the monthly jobs report set for Friday.