Mortgage costs across Europe and North America have risen sharply as the economic impact of the Middle East war spills into housing markets, piling pressure on borrowers wanting to buy a new home or refinance.
The jump has come even though central banks have refrained from raising interest rates. Mortgage lenders are responding to increases in governments’ borrowing costs and betting that official rates will eventually need to rise to contain the threat of inflation.
In the US, the conflict has driven the 30-year mortgage rate to 6.36 per cent, above levels seen in September 2025, before the Federal Reserve began a cycle of three quarter-point rate cuts.