Mortgage rates are surging because of the Iran war. Here's what to do.

Core Insights - The ongoing war in Iran has contributed to rising mortgage rates, with the 30-year fixed-rate mortgage increasing to 6.38% shortly after dipping below 6% earlier this year [1] - Adjustable-rate mortgages (ARMs) are gaining popularity as borrowers seek more affordable options amidst elevated home prices and rising living costs [2] Mortgage Rate Trends - The 30-year fixed-rate mortgage saw a significant increase, marking the largest one-week surge since April 2025 [1] - As of late March, ARMs accounted for over 8% of all mortgage applications, indicating a shift in borrower preferences [5] Adjustable-Rate Mortgages (ARMs) - ARMs provide a fixed rate for an initial period (typically five or seven years) before becoming adjustable, which can be beneficial for borrowers looking for lower initial payments [3] - A recent analysis indicated that using a 5/1 ARM could save borrowers approximately $185 per month for a median-priced home with a 10% down payment [4] Market Dynamics - In high-cost markets like California, ARMs represented over 31% of mortgage originations in 2025, highlighting their importance for buyers in these areas [5] - The resurgence of ARMs is seen as a crucial option for those entering the housing market or upgrading to larger homes [5] Historical Context - ARMs faced criticism during the subprime crisis due to the prevalence of exotic loan products, but their appeal has returned as interest rates have risen [6] - Buyers who remain in their homes beyond the fixed-rate period may face risks of rate adjustments, which could impact their financial stability [7]