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US fixed 30-year mortgage rate hits three-month high amid Iran war

BY Reuters | AGENCY | 12:34 PM EDT

WASHINGTON, March 19 (Reuters) - The average rate on the popular U.S. 30-year fixed-rate mortgage surged to a three-month high this week as war in the Middle East stoked inflation fears, dealing a blow to the Trump administration's efforts to make housing more affordable.

The 30-year fixed mortgage rate averaged 6.22%, highest since early December, up from 6.11% last week, mortgage finance agency Freddie Mac said on Thursday. Rising mortgage rates, if sustained, could hamper home sales during the typically busy spring season.?

The benchmark rate fell to 5.98% on the eve of the U.S.-Israeli war with Iran after President Donald Trump ordered Freddie Mac and Fannie Mae to expand purchases of mortgage-backed securities.?

It reversed course as the conflict drove up oil prices and U.S. Treasury yields. Mortgage rates track the benchmark 10-year Treasury yield. Housing affordability has become ?an increasingly potent political issue ahead of the November midterm elections.

(Reporting by Lucia Mutikani; editing by David Gaffen)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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