Author: Eric BernsteinPublished:
Homebuyers and homeowners saw another drop in mortgage rates last week as the US and Iran reached a 2 week ceasefire agreement as the 2 try to negotiate a peace deal. Unfortunately, initial peace talks over the weekend were not as successful as hoped, which is why we're seeing stocks noticeably lower and mortgage rates flat. The US and Iran need to reach a long lasting peace deal in order to see oil prices fall significantly and mortgage rates go back to where they were before the start of March.
The average rate on a 30-year fixed rate conventional loan dropped to 6.26%, now down almost 0.25% over the last 2 weeks. See what rates we're offering by signing up for our Friday rate texts.
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Iran Ceasefire
The week's biggest story was a dramatic last-minute ceasefire between the US and Iran. Trump escalated tensions to a boiling point, warning that "a whole civilization will die tonight" if Iran didn't reopen the Strait of Hormuz, a critical shipping route for global oil exports. Hours later, a deal was struck.
Pakistan's Prime Minister brokered the conditional two-week truce, which restores shipping through the Strait while formal negotiations continue. Oil prices and mortgage rates fell on the news, as markets welcomed the reduction in geopolitical risk. But the deal remains fragile, the US and Iran hold differing views on what it actually entails, Lebanon is explicitly excluded, and US troops remain on standby ready to re-engage at any moment. How long this lasts is anyone's guess.
Inflation Reporting
March CPI came in at 3.3% annually, up sharply from 2.4% in February, but the story was almost entirely energy. Gasoline alone surged 21.2%, accounting for nearly three-quarters of the headline increase. Strip that out and core CPI rose just 2.6% year over year, actually coming in below forecast, signaling that underlying inflation remains well-contained.
The February PCE report, the Fed's preferred inflation gauge, told a similar story heading into the conflict. Core PCE held at 3% annually, in line with expectations, while headline PCE came in at 2.8%. GDP for Q4 2025 was also revised down to just 0.5% growth, raising stagflation concerns even before the war's impact on energy prices was felt.
Taken together, the data makes one thing clear: the Iran conflict is the single biggest inflation wildcard right now. Before the war, underlying inflation was gradually cooling. The energy spike that followed pushed headline numbers to their highest level since 2024 and puts the Fed in a tough spot. The ceasefire is welcome news, but until there's a durable resolution, both oil prices and mortgage rates remain hostage to every headline out of the Middle East.
Failed Peace Talks
The ceasefire optimism didn't last long. After more than 21 hours of talks in Islamabad on Saturday April 11th, Vice President JD Vance and the US delegation walked away without a deal on Sunday morning, saying Iran had chosen not to accept US terms. The core sticking point was nuclear enrichment: the US demanded Iran fully abandon its nuclear weapons program, dismantle enrichment facilities, and open the Strait of Hormuz without charging shipping tolls. Iran refused, and its parliament speaker responded with a blunt warning to Trump: "If you fight, we will fight."
The fallout was immediate. With the talks collapsed, the US announced a naval blockade of all Iranian ports beginning Monday morning, sending oil prices surging above ~$96 a barrel. Iran's Revolutionary Guard warned that any warships approaching the Strait would receive a "forceful response," and Iran threatened to extend disruptions to the Bab el-Mandeb Strait as well. The two-week ceasefire technically remains in place until April 22, but with no deal in sight, a US blockade now active, and both sides trading threats, the window for a peaceful resolution is closing fast. For mortgage rates and energy prices, this is the story to watch.
What to expect this week?
With oil prices surging, the ceasefire on shaky ground, and markets on edge, this week's data and heavy Fed speaker schedule will be closely watched for clues on where rates are headed.
Monday brings existing home sales for March, offering a read on whether buyers are still active despite the uncertainty.
Tuesday is the key inflation day with PPI data dropping at 8:30am, giving markets a fresh look at wholesale price pressures in the wake of last week's hot CPI.
Wednesday adds import prices, homebuilder confidence, and the Fed Beige Book, which will be one of the more revealing reads of the week given how much has changed since the last one.
Thursday rounds out the data week with jobless claims, industrial production, and the Philly Fed manufacturing survey.
Friday is all Fed speakers, with Mary Daly, Tom Barkin, and Christopher Waller all on the calendar. Their take on the Iran war, inflation and labor markets will have an impact on how mortgage rates react. Markets are currently pricing in no rate cuts or rate hikes from the Fed in 2026.
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