After weeks of steadily declining mortgage rates, the direction changed abruptly this week. Joint US-Israeli airstrikes targeting Iranian military infrastructure began on February 28, and the ripple effects have been felt across every corner of the financial markets — including the housing sector.
What Happened
The military operation, which included strikes on Iranian leadership and nuclear facilities, prompted Iran to declare the Strait of Hormuz closed to shipping traffic on March 4. The Strait is one of the world's most critical oil chokepoints, and the closure sent crude oil prices surging. Brent crude jumped from around $71 per barrel on February 27 to over $77 by March 2, and the upward pressure is intensifying as the situation develops.
The February jobs report, also released this week, added to the uncertainty. The economy lost 92,000 nonfarm payrolls — well below the consensus estimate of a 50,000 gain — driven largely by a Kaiser Permanente strike that sidelined over 30,000 health care workers. The unemployment rate ticked up to 4.4 percent.
Impact on Mortgage Rates
Mortgage rates, which had dipped to 5.98 percent just last week, are already moving higher as markets price in the inflationary impact of rising energy costs. When oil prices spike, it increases costs throughout the economy — from transportation to manufacturing to home heating — which tends to push inflation expectations and bond yields higher. And when bond yields rise, mortgage rates follow.
What This Means for Central Utah
For our communities, the immediate impact is most visible at the gas pump. Rural Central Utah residents drive longer distances and tend to feel energy price increases more acutely than urban areas. If oil prices remain elevated, we can expect higher costs for commuting, heating, and everyday goods — all of which affect household budgets and, by extension, home-buying power.
That said, we are still in a fundamentally different — and better — rate environment than we were a year ago. Even if rates drift back toward the low sixes, that is still significantly below the levels buyers were facing through most of 2024 and 2025. Our advice: if you are in a position to buy and you find the right home, do not let short-term volatility keep you on the sidelines. The Central Utah market remains affordable, and waiting for perfect conditions often means missing good opportunities.
The Week Ahead
The situation in Iran is evolving rapidly, and markets will be watching every development. We will also get the February CPI inflation report next week, which will give us the latest read on consumer prices before the oil shock fully works its way through the economy.