Treasury rally offers mortgage market brief relief amid war jitters

United States Treasury yields edged lower on Monday as investors shifted toward safety ahead of a dense slate of jobs data. The move offers a brief reprieve for mortgage markets, which have been battered by war‑driven volatility.

The 10‑year Treasury yield, the key benchmark for 30‑year fixed mortgages, slipped to around 4.36% in early trading, with the 30‑year at roughly 4.92% and the 2‑year closer to 3.86%.

Yields surged roughly half a percentage point since late February as the US–Iran war roiled energy markets and reset expectations for inflation and Federal Reserve policy.

“Looking at the week ahead, we should start to learn about the economic consequences of the conflict, as several data releases for March are out, which cover the period since the strikes began on February 28,” Deutsche Bank analysts said in a note.

They highlighted the JOLTS, ADP and Friday’s nonfarm payrolls reports, alongside the ISM manufacturing survey, as early tests of whether higher oil prices are bleeding into inflation and business costs.

“Otherwise in the US, the focus will be on whether higher oil prices have started to impact business sentiment and inflation in a meaningful way,” the analysts said.

The latest move came after Freddie Mac’s latest Primary Mortgage Market Survey showed the 30‑year fixed mortgage averaged 6.38% as of March 26, 2026. That’s up from 6.22% a week earlier and 6.65% a year ago.

The 15‑year fixed rate also moved higher to 5.75%, from 5.54% the prior week and 5.89% a year earlier.

Earlier this year, one strategist warned that “pent‑up volatility could rock the Treasury market” in 2026, even as surface conditions looked calm.

Another market analyst told Mortgage Professional America the recent swings “paused the excitement around mortgage rates in the 5s,” undercutting hopes for a stronger spring buying season.

In Washington, president Donald Trump said the US is “in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran.”

If the Strait of Hormuz is not “immediately” reopened and no deal emerged “shortly,” he threatened to “completely” obliterate Iran’s energy infrastructure, including Kharg Island.

Those comments, along with reports of preparations for a possible ground campaign, add another layer of uncertainty for bond investors and rate‑sensitive housing professionals.

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