⛽️ Conflict, Crude, and Closings: How the Israel-Iran Tension COULD Affect Rates

GIRL DAD.

No title means more.

My proudest role.

This weekend, my three daughters reminded me why I show up every day—with hugs, laughter, and the kind of love that makes the hard days feel light.

I also had a chance to talk with my dad and father-in-law. As I get older, I’m realizing how lucky I am to have such strong, male role models in my life. I can’t take that for granted.

To every man out there showing up, providing, leading with love—Happy (belated) Father’s Day. Your sacrifice is seen. And it matters.

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Read time: ~5 minutes

Rates ended DOWN compared to last week, and volatility was HIGH. Rates are in the high 6% range for most loan types without paying discount points. Paying discount points can get you in the mid 6's.

⛽️ Conflict, Crude, and Closings: How the Israel-Iran Tension COULD Affect Rates

If you’ve been following the news lately, you’ve probably seen the headlines about the escalating tension between Israel and Iran. As much as this feels like something happening over there, and while we all hope it cools down soon, it’s already sending ripples through global markets—and that includes mortgage rates right here at home.

Let’s break it down 👇

📉 Why rates typically dip during military escalation

When geopolitical tensions rise, especially in oil-sensitive regions like the Middle East, markets tend to get jittery. Investors usually shift money into “safer” assets like U.S. Treasury bonds. When that happens, yields on those bonds drop—which often pulls mortgage rates down with them.

That didn’t happen Friday, the day after Israel mounted their first major assault against Iran’s nuclear capabilities.

🔥 But here’s the bigger concern: Oil & inflation

Iran is a major oil producer, and any sustained military conflict in that region can send oil prices spiking. Higher oil prices don’t just mean pricier gas at the pump—they ripple into every corner of the economy:

• Shipping and freight costs go up

• Goods become more expensive

• Airline, construction, and manufacturing costs rise

That fuels inflation—and if inflation creeps back up, you already know what the Fed won’t like. They’ll likely pause any talk of cutting rates, and might even tighten policy again if things really escalate.

So while we may see a short-term dip in rates, a sustained rise in oil could mean higher rates in the long run.

🚢 What if Iran blocks the Strait of Hormuz?

This is the nightmare scenario markets are watching closely. The Strait of Hormuz is a narrow waterway between Iran and the Arabian Peninsula—and about 20% of the world’s oil flows through it. If Iran were to shut it down or disrupt traffic:

• Global oil supply takes a huge hit

• Prices skyrocket

• Inflation surges

• Markets freak out

In that kind of environment, the Fed’s hands are tied. Rate cuts? Probably off the table. And if inflation jumps? We could even see upward pressure on mortgage rates again.

💡 What should buyers and agents do?

✅ Buyers: If rates dip in the short term, it might be worth locking in sooner than later. Watch oil prices, if they push into the $80-$90 range, we could see rates push higher on inflation expectations.
✅ Sellers: Slightly lower rates could bring some buyers back into the game—be ready.
✅ Agents: There is A LOT of uncertainty in the news and folks are freaking out, rightfully so. Be the voice of calm. Your clients need clarity, not panic.

These are the kinds of moments where timing matters.

Focus on Credit Report Fees Won’t Help Buyers

In a recent op-ed, Mortgage Bankers Association (MBA) President Bob Broeksmit is pushing to replace tri-merge credit reports with a single report, claiming it’ll cut costs for buyers.

While the MBA’s proposal to move toward a single credit report model sounds consumer-friendly on the surface, let’s be real: this isn’t the silver bullet that’s going to meaningfully reduce homebuyer costs. It’s the equivalent of clipping your fingernails to lose weight.

Yes, tri-merge reports have become increasingly expensive, and yes, lenders are frustrated by the lack of competition among the credit bureaus. But let’s not pretend that a $40–$60 savings on a single credit pull (assuming that savings even gets passed to the consumer) is going to make a meaningful dent in the affordability crisis facing homebuyers today.

The reality is that mortgage lenders, not consumers, are usually the ones eating the credit report cost—especially when a lead doesn’t convert.

Closing costs, property taxes, insurance premiums, inflated home prices, and rate volatility are far bigger line items. The average buyer in today’s market is staring down thousands in upfront costs—not stressing over a slight increase in credit report fees.

Additionally, Mr. Broeksmit suggests using one credit bureau just like auto lenders and HELOCs. Comparing mortgages to car loans sounds slick in a press release—but underwriting a 30-year mortgage isn’t the same as approving a $30K auto loan. Not even close.

In short, we support efficiency—but let’s not overhype a tiny potential savings while ignoring the elephants in the room.

Inflation Data Offers a Glimmer of Hope

CPI was up just 0.1% for the month (vs. 0.2% expected), and year-over-year inflation ticked up slightly from 2.3% to 2.4%. Core inflation (which strips out food and energy) held steady at 2.8%. Translation? Prices aren’t spiraling... yet.

Retailers may still be working through cheaper inventory, or some businesses might just be eating the costs for now. Either way, the tariff hikes haven’t hit the consumer wallet just yet.

Shelter inflation (housing costs) continues to trend down—currently sitting at 3.9% annually—which is good news long-term for mortgage rates and affordability.

The housing market is still dealing with a number of headwinds including higher interest rates. Jerome Powell and the Federal Reserve want to see inflation near their 2% target (and a weaker job market) before considering a rate cut.

This Wednesday we will hear from Powell on whether he’ll make any changes to the Federal Funds Rate. With 98% probability, markets think he’ll hold rates flat. Trump’s tariffs are on pause until July, and there’s early talk of a trade deal with China—both of which help take the pressure off inflation (and hopefully rates).

The Market Midpoint : What the First 6 Months Reveal About the Rest of 2025

Join Tommy Choi for a timely and data-packed conversation with Lawrence Yun, Chief Economist at NAR, as they unpack what’s happened in the first half of 2025. With real-time housing data and expert analysis, Dr. Yun will help you make sense of where the market’s been—and where it’s headed.

• The key economic signals shaping the 2025 market

• What current mortgage rates, inventory levels, and buyer/seller trends really mean

• How to adjust your strategy to stay competitive in Q3 and Q4

• Why now is a critical time for smart, informed action

Whether you're advising buyers, sellers, or just trying to stay ahead of the curve, this is the midyear check-in you can’t afford to miss.

The FREE webinar takes place next Tuesday, June 24th from 2-3PM.

You already know Kreg and I will be digesting everything during this month’s Top Agent Masterclass with our boy Tommy. Join us!

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Don’t hesitate to reach out if you need anything at all. Have a wonderful week!