Mortgage rates hit highest level since June 2025 amid Middle East conflict

The year’s monetary policy outlook shifted sharply after the outbreak of hostilities with Iran, a development that drove global oil prices higher and disrupted expectations of falling interest rates. Analysts had projected a gradual easing of rates to support economic recovery, but the sudden spike in energy costs has altered that trajectory.

The conflict has pushed Brent crude above $90 a barrel, a level not seen since 2014, and has tightened supply chains across the Middle East. Central banks, observing the inflationary pressure from elevated fuel prices, are now reassessing the timing and magnitude of rate cuts. The rise in oil prices has also amplified concerns about sustained inflation, prompting a more cautious stance from policymakers.

In light of these dynamics, market participants anticipate that the anticipated rate cuts may be delayed or scaled back. The interplay between geopolitical risk and commodity pricing continues to shape monetary policy decisions, underscoring the sensitivity of financial markets to global events.