Mortgage Rates Today, September 21, 2026: A Quiet Week Ahead for Rates? Only If Middle East Stays Calm

The bigger picture

Mortgage rates for 30-year fixed-rate loans stayed above 7% all last week, rising on all but one day. Chances are, economic reports had little to do with that. But plenty of other forces are acting on those rates.

"With fighting intensifying in Yemen, threats escalating between Washington and Tehran, and energy markets remaining sensitive to disruptions, many diplomats arriving in New York see this year’s General Assembly as taking place under one of the most volatile Middle East security environments in recent years," reported CNN yesterday. Mortgage rates might push yet higher if the weekend's tensions don't cool.

Scroll on down for much more on the forces affecting mortgage rates today. No economic reports are on this morning's calendar.

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What's coming up?

Normally, economic reports are the main drivers of changes to mortgage rates. But these are not normal times.

And only blockbuster reports, mostly concerning employment and inflation, have had appreciable impact over much of this year. More important have been the general mood in markets and economically consequential news. News items concerning the war, employment, inflation, tariffs, and deficit funding are especially influential at the moment.

The Fed

On Sep. 16, the Federal Reserve's rate-setting body (the Federal Open Market Committee or FOMC) hiked general interest rates for the first time in three years.

That vote was unanimous. But official Fed documents revealed that FOMC members are deeply divided over what comes next.

"Sixteen of 19 officials expect another increase at either their October or December meeting," reported MarketWatch soon after the meeting. "For next year, 10 officials signaled they see no more moves, but eight officials are penciling in another quarter-point increase."

Such small majorities within the FOMC suggest the number and timing of future rate hikes will likely be driven by key data: inflation and employment reports in the coming months. The Fed's twin mandates are to keep the inflation rate down at 2% (something it's failed to achieve over the last five years) and to maintain healthy employment levels.

Unfortunately, we think it is likely that inflation will remain elevated well into 2027, even if the Iran war ends soon. We suspect that the global oil market is in such bad shape that it will take a long time for gas and diesel prices to fall back to anything close to pre-war levels. More on that below.

The FOMC doesn't directly set new fixed-rate mortgage rates. But the factors that influence its decisions (and to a lesser extent the decisions themselves) certainly do move those rates, usually in advance of Fed rate-change announcements.

The war and mortgage rates

For the first time in a month, the U.S. mounted airstrikes on Iranian military targets in the small hours of Aug. 31, and followed up with bigger attacks the following afternoon. Iran retaliated against both waves, and intermittent airstrikes have continued on both sides ever since.

Over the Labor Day weekend, both sides again escalated tensions, sending oil prices higher on most days since. Last night, the price of global benchmark Brent Crude was still well over $100 a barrel.

On Sep. 11, Saudi Arabia shut down its major East-West pipeline, which it had been using to bypass the Strait of Hormuz, following an airstrike on it. "The incident comes amid a major advance by the Iranian-backed Houthi rebels in Yemen, putting more pressure on global oil shipping routes as the US-Iran war stretches into its seventh month," said the BBC.

Three pumping stations along the pipeline have been hit in total, says Reuters. And they have caused the Saudis to suspend deliveries of crude oil to some European customers with long-term standing orders, according to The Jerusalem Post.

Over the week ending Sep. 19, Houthis escalated their attacks, striking at Saudi cities, including the capital Riyadh, along with oil facilities. "Saudi Arabia on Saturday confirmed that Yemen's Houthi rebels tried to attack its capital with a ballistic missile, the first targeting of Riyadh since the escalation in fighting with the Tehran-backed rebels that has opened a new front in the Iran war," reported NPR. A plume of black smoke was observed close to the capital's airport.

"President Trump revealed Sunday he is considering 'blowing up' all of Iran and that 'very big things are going to be happening' soon — as he left a retreat at Camp David a day early so he could return to the White House," said The New York Post on Sep. 20.

Peace talks with Iran and mediators had already stalled before this month's escalations, and President Donald Trump adopted a new strategy of economic warfare on Tehran. "Treasury Secretary Scott Bessent said the U.S. is launching a new campaign to isolate the Iranian regime, warning that countries and companies that do business with Tehran will face the wrath of the Trump administration," The Wall Street Journal reported on Aug. 24. Some think that initiative has turned out to be a damp squib, but it's still early days.

Iran is certainly in a weak position economically, and waiting for it to buckle may be a smart way to resolve the conflict. However, markets remain anxious for a rapid reopening of the Strait of Hormuz.

The war, oil prices, inflation and markets

Mortgage rates respond to war news because a prolonged closure (or partial closure) of the Strait of Hormuz could again choke off 20% of the world's oil supply, putting additional pressure on gas, diesel, fertilizer and many other prices. It would take years to build the infrastructure necessary to bypass the Strait completely.

On Sep. 14, The Wall Street Journal reported on a gloomy outlook among oil industry leaders when they met in Austin, TX, the previous Friday. "American oil executives warned for months that the prolonged closure of the Strait of Hormuz was bound to cause a fuel crisis. Now, they say it is here.

"Commercial fuel stocks around the world have been depleting for more than six months, and strategic crude reserves can’t be tapped much further," continued The Journal. "Attacks last week shut down a crucial crude pipeline in Saudi Arabia that bypassed the Strait, stranding at least 2.5 million barrels a day from an already tight global oil market, analysts estimate."

"Commodity vessel transits through the Strait of Hormuz dwindled to ​just three ships on Wednesday, down from ‌12 a day earlier and well below the 10-day average of about 17, preliminary ship-tracking data showed on Thursday," reported Reuters on Sep. 17. Before the war began, such traffic averaged more than 100 ships daily.

Strategic petroleum reserves in the U.S. and elsewhere globally are now at multi-decade lows, meaning there's less room to cushion consumers from rising gas prices. It may not feel like it, but this method of suppressing pump prices has been in place almost since the start of the conflict. And some observers worry that it will grow increasingly difficult to access remaining inventory for technical extraction reasons.

The U.S. Energy Information Administration says strategic petroleum reserve crude inventories fell to 284,957,000 barrels for the week ending Sep. 11, marking the lowest level since 1982. The reserve stood at 415,064,000 barrels before the Iran conflict began.

Rising oil prices tend to drive up mortgage rates because they're inflationary. Those rates are largely determined by a type of bond, the mortgage-backed security. And bond purchasers are wary of buying bonds when inflation is too warm because increasing prices eat into the value of the fixed incomes that bonds deliver.

The Refinery Problem

Meanwhile, many oil refineries in the Middle East and Russia are out of commission due to damage from the separate wars involving Iran and Ukraine. That began by sending oil prices lower on most days — though much less so recently. Still, why buy crude oil when you can't refine it?

Unfortunately, that has so far translated into gas prices that are significantly higher than a month ago and dramatically higher than a year ago, alongside record-high diesel prices. That's because a lack of refining capacity exacerbates rather than moderates supply issues for consumers and businesses, while demand remains fairly steady.

In his Substack post on Aug. 13, Nobel Prize-winning economist Paul Krugman backed up what we've been saying for some weeks. He referred to the "crack spread," which is the difference between the price of a barrel of crude oil and that for a barrel of "cracked" (aka refined) oil products, which he said had exploded by about $35 since the start of the Iran conflict.

"So while the price of a barrel of crude is up around $25, the price of the products refined from that barrel is up about 25+35=60 dollars per barrel," wrote Krugman.

Why? "The shortage of refining capacity has, in turn, held crude prices down: Buyers aren’t willing to pay extremely high prices for crude oil they can’t refine," continued Krugman. "Or to put it a different but equivalent way, the cutoff of oil shipments through the Strait of Hormuz in effect required a large rise in global oil prices to ration demand, but much of that rationing has taken place through a rise in the crack spread rather than a rise in crude oil prices."

Of course, any sudden good news from the Middle East could still send mortgage rates tumbling, regardless of that day's economic reports. Unfortunately, sudden bad news could — as we've seen in recent days — send them higher.

Why bond markets act differently from stock markets

Mortgage rates are largely dictated by the yields on a type of bond, the mortgage-backed security (MBS). So, we focus on bond markets.

On May 7, The New York Times explored why stock markets and bond markets have been behaving so differently from each other since the start of the conflict in the Middle East.

Investors in stocks have been wagering that U.S. companies will continue to generate large profits during the conflict. And the stock market typically cares only about whether dividends and company values will continue to rise.

"But the bond market is another matter," said The Times. "Bond traders have maintained a much sharper focus on risk. Yields remain correlated with shifts in the price of oil. As oil prices have spiked and inflation has risen, yields have risen and bond prices, which move in the opposite direction, have fallen."

More recently, bond yields (and mortgage rates) have risen on concerns about the level of government debt, too.

Mortgage rates today

There are no economic reports on today's MarketWatch economic calendar.

What's next?

This week's economic reports rarely have much impact on mortgage rates.

However, Friday's final consumer sentiment index for September might be an exception. We might also see a bit of movement in response to Wednesday's purchasing managers' indices from S&P Global, but we'll be surprised if they have a noticeable effect.