Mortgage rates jumped sharply this week. The housing market faces fresh pressure just as it seemed to stabilize.

The Big Picture The Federal Reserve may not cut interest rates at all in 2026. Chair Jerome Powell said it's "way too early" to judge the full impact of the U.S.-Israel war with Iran on inflation. The conflict, which began February 28, has halted shipping through the Strait of Hormuz and sent oil prices soaring.

In the U.S., average gas prices have jumped roughly a dollar over the last month and are quickly approaching $4 per gallon. This energy shock follows multiple years of elevated inflation, worrying Fed officials about potential increases in longer-term inflation expectations.

“"It's one of those times where you get a series of supply shocks: first the pandemic, then the much smaller one from tariffs, and then we're getting now an energy shock," Powell said.”

Why It Matters Mortgage rates are already reacting. According to Freddie Mac, rates averaged **6.38%** last week, up from a three-year low of **5.98%** in February. The increase reflects concern that the oil shock will spark renewed inflation, forcing the Fed to delay further rate cuts or possibly raise rates.