After mortgage rates gradually improved throughout 2025, the industry seemed to be optimistic that 2026 would continue the same path, with rates improving throughout the year. As we know, forecasts are not always accurate, and they can’t account for large-scale events that shake up the markets. Early in the year, an order from the Trump administration for Fannie and Freddie to buy Treasury bonds helped push rates into the mid 5%’s. However, one month later, the Iran War started, and oil prices spiked higher. This caused inflation to increase, and Treasuries followed as well. This pulled mortgage rates back into the low 6%’s.
So what now? As always, it’s about inflation. If inflation tempers and doesn’t show any more signs of getting worse, we should see mortgage rates go back down. So we need to watch oil prices as that is the key mover of inflation right now.
