Trump's Iran Aerial War Pushes Mortgage Rates Higher
- 6 days ago
- 4 min read
By Don DeBat
Chicago home buyers are not fleeing from guided missiles, but President Donald Trump’s aerial war against Iran has had a dramatic, negative impact on the spring housing market in the Windy City.
The Mideast War has pushed mortgage-interest rates sharply higher, analysts report.
“Last week the rates dipped to 5.99% for the first time in 3.5 years, and everything seemed to be moving along positively,” noted veteran lender Jeremy Rose, senior loan officer for Stonehaven Mortgage.
“Then, because of the Iran War, on Monday, March 2nd, mortgage-backed securities took a drastic turn for the worse. We are now seeing conventional mortgages rates rising anywhere between 0.25% [of 1 percentage point] to 0.375% since Friday February 27th.”
That means borrowers paid higher interest charges of 6.25% to 6.375% in the first week of March as a direct result of the Iran War and other economic factors.
Typically, when war breaks out, Treasury bonds become a safe haven, Rose explained.
“However, this time around, traders surprisingly moved money out of the stock market and into the U.S. dollar. We are finally seeing the dollar valuation increase for the first time in many months.”
Rose noted that the home-loan refinance business also has definitely slowed down in the first week of March.
“Home-buying is still happening for the time being,” Rose said. “This market has been the best I've seen in about three years. However, I’m worried that the longer we are at war, or without a conflict resolution, and as the price of gasoline increases, along with higher inflation, we may see the housing market slow down.”
On the positive side, Rose noted that first-time borrowers in Chicago who earn $94,080 or less and have decent credit can qualify for a below-market rate mortgage through the Fannie Mae “Home Ready” program or the Freddie Mac “Home Possible” program. Both plans are designed to make home financing more affordable.
“It practically equates to an interest rate cut of about a 0.375% of 1% under the market mortgage rate for borrowers whose income is above the threshold,” explained Rose (left), who can be contacted via email at jeremy.rose@stonehavenmtg.com.
Stocks down & gas prices up
Since President Trump bagged his golf clubs, and started rattling his saber, stock sales activity on Wall Street has looked like a downhill roller coaster. The Dow Jones average has plummeted 1,500 points.
After Iranian war ships closed the Strait of Hormuz, a waterway where a fifth of the world’s oil passes, gas prices in Chicago have jumped 20 cents a gallon, and analysts say they could soon will rise another 20 cents.
The war already has put a $30 a month bite on the average commuter’s gas wallet. Doomsayer analysts are predicting $5 to $6 per gallon gas before the war is over. At $3.32 a gallon, Illinois already has the eighth highest gas prices in the nation, thanks to the state’s second highest gas taxes in the U.S.
Critics say Trump attacked Iran to take newspaper and TV headlines off of the negative impact of the Epstein files, his global tariffs on inflation, governmental corruption and the brutal tactics of his immigration-agent goons.
On March 2nd, Trump predicted that the Iran War could go on for four to five weeks or even longer. However, he refused to rule out sending U.S. ground troops, which would be a replay of the costly 1991 Iraq War. What happened to America First?
Mortgage rates steady before war
On February 26th, for the first time in 3.5 years, benchmark 30-year fixed home loans nationwide hit 5.99%, reported Freddie Mac’s Primary Mortgage Market Survey. However, a week later, on March 5th, 30-year fixed mortgage interest rates inched back to 6%. A year ago, lenders were quoting 6.63% on 30-year fixed loans.
“Mortgage rates held steady at 6% last week, their lowest level since 2022,” said Sam Khater, Freddie Mac’s chief economist. “Rates were down nearly one full percentage point from this time in 2024, spurring activity from buyers, sellers and owners.”
Fifteen-year fixed loans averaged 5.43% on March 5th, down slightly from 5.44% a week earlier. A year ago, the 15-year fixed loans averaged 5.79%.
The Freddie Mac survey is focused on conventional, conforming, fully amortizing home-purchase loans for borrowers who place a 20% down payment and have excellent credit.
Does Trump really want low rates?
In mid-January, Trump made headlines when Federal Reserve Board (Fed) Chairman Jerome Powell and other knowledgeable board members were slow to react to his bullish demands for lower interest rates.
The much-respected Powell was put under “criminal investigation” by the U.S. Justice Department—an attack tool of the president—in connection with the rising costs of renovating a collection of the Fed’s historic Washington, D.C., office buildings.
Powell said the probe was a threat to the independence of the Fed, and refused to buckle under. He was backed by former Fed chairs Alan Greenspace, Ben Bernanke and Janet Yellen and a bipartisan group of economic luminaries. “Political action related to the potential loss of Federal Reserve independence could cause interest rates to rise,” observed Rose.
Powell’s term ends in May of 2026, and Trump’s replacement, if approved by Congress, will have to deal with the ashes of the aftermath, including the Iran War.
Going forward, Powell will retain a position on the Fed’s board of governors until 2028, so he likely will continue to have a moderating influence on the direction of interest rates.
For more housing and softball news, visit www.dondebat.biz. Don DeBat, a 1999 Softball HOF inductee, is writing a book titled “Chicago’s Game.” DeBat also is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com
