Mortgage rates hit 6.46%, erasing six months of decline in five weeks

The 30-year fixed mortgage rate reached 6.46% in the week ending April 2, according to Freddie Mac data — the highest since early October and a sharp reversal of a six-month decline that had brought rates within reach of the 5s.

From October through late February, rates fell steadily from 6.34% to 5.98%, tracking the Fed's 70 basis points of cumulative rate cuts. The decline stalled in early March, then reversed hard as the Iran conflict sent oil prices surging and reignited inflation fears.

The transmission chain

The connection between an oil war and your mortgage rate runs through Treasury yields:

1. Oil spikes — WTI crude rose from $62 to $113 as the Iran conflict closed the Strait of Hormuz and U.S. strikes hit Kharg Island
2. Inflation expectations rise — energy costs feed into transportation, manufacturing, and food prices across the economy
3. Treasury yields climb — the 10-year yield rose from 4.20% on March 17 to 4.44% on March 27, a 24bp jump
4. Mortgage rates follow — the 30-year fixed tracks the 10-year Treasury, climbing 48bp from the February trough