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Iran War Triggers US Borrowing Cost Surge, Mortgage Rates Near 6.37%
War Drives Up US Borrowing Costs
The conflict with Iran is now significantly impacting U.S. borrowing costs. This pressure is most evident in the housing market, where mortgage rates have climbed for five straight weeks, rising from 5.98% in late February to nearly 6.37%. This movement closely tracks a sharp rise in the 10-year U.S. Treasury yield, which jumped from below 4% to as high as 4.48%, before easing slightly to 4.3%. Investors are reacting to higher oil prices, rising inflation risks, and expectations of increased government spending to fund the war.
Broader Impact on Loans and Consumer Finances
The increased borrowing costs are not limited to housing. Auto loans and credit cards are also feeling the heat. Average five-year auto loan rates are hovering near 7%, with a monthly EMI on a $30,000 loan reaching $594. Meanwhile, credit card interest rates remain above 19%, despite earlier rate cuts by the Federal Reserve. With markets now expecting fewer rate cuts, everyday expenses financed through credit cards are becoming harder for consumers to manage, and short-term yields are at multi-month highs.
Energy Price Surge Threatens Economic Outlook
The surge in energy prices is at the core of this economic impact. Every $10 rise in oil can push up inflation by 0.3 percentage points and shave economic growth by up to 0.2 percentage points. If oil sustains near the $100 per barrel mark, inflation could rise by over 1 percentage point, and growth would take a further hit. Higher energy costs also threaten key drivers like AI-led investment, which has powered recent U.S. growth. Coupled with a widening fiscal deficit and rising war-related spending, the risks to the economic outlook deepen. While the U.S. may be more resilient than other energy-dependent economies, consumers are already feeling the strain through higher fuel costs and declining confidence.
*Source: YouTube: WION (2026-04-10)*
