The 30-year fixed mortgage rate closed Monday at 6.49%. The Federal Reserve's target range remains 3.25-3.75%. The spring housing market, which in normal years produces roughly 40% of annual home sales volume, is frozen.

The paper's tracking of the rate climb through mid-March documented the mechanism: war-driven oil price inflation raises inflation expectations, which raises the 10-year Treasury yield, which raises mortgage rates, which prices buyers out of a market that has not seen home prices decline proportionally to the rate increase. The mechanism has not changed. The rates have continued to rise. [1]

The Fed's position is the trap. At 3.25-3.75%, the federal funds rate is already restrictive. Cutting it would risk stoking the very inflation the war is generating. Holding it provides no relief to mortgage markets. Raising it would produce a recession that the administration has no political capacity to absorb. The Fed, which spent two years fighting post-pandemic inflation, is now trapped between a war it cannot control and an inflation it cannot suppress without causing damage that exceeds the cure. [2]

The war premium in mortgage rates is approximately 60-80 basis points by most analyst estimates — the spread between where rates would be based on purely domestic economic conditions and where they are with $102 oil and a closed Strait of Hormuz. Sixty basis points is not an abstraction. On a $450,000 mortgage — the US median home price adjusted for current market conditions — 60 basis points represents approximately $190 per month in additional payment. Over a 30-year loan term, it represents $68,000 in additional interest.

That $68,000 is the war tax that American homebuyers are paying. It appears in no federal budget. It is not an appropriation. It is not authorized by Congress. It is the war's cost, distributed across the housing market in payments that no one will ever attribute to any policy decision. [3]

Spring 2026 should be, by historical pattern, the strongest selling season since pre-pandemic 2019. The millennial cohort — the largest demographic cohort in American history — is at peak home-buying age. The supply of existing homes has been constrained for three years by the lock-in effect of buyers who purchased at 3% and refuse to sell into a 6.49% market. Demand is real. Supply is constrained. In normal markets, this produces price appreciation and sales volume.

What it is producing instead is paralysis. Buyers cannot qualify at 6.49% for homes priced for a 5% market. Sellers cannot lower prices to the level that 6.49% buyers can afford because the sellers themselves have mortgages at 3% on homes they've held since 2021. The market has locked itself into a standoff that neither buyers nor sellers can break without absorbing losses neither is willing to accept.

The war will end. The Fed will cut eventually. The lock-in effect will ease, slowly. The spring market of 2026 will be studied as the season that wasn't — the year when the housing market's structural conditions were ideal and the geopolitical conditions made those structural conditions irrelevant.

The war premium will not appear in the case study's title. It will be in the footnotes, where the real causes of economic dysfunction tend to live.

-- HENDRIK VAN DER BERG, Brussels