Mortgage rates climbed to 6.38 percent for the fourth consecutive week, the highest level since September, as Middle East tensions continue to roil financial markets. The average 30-year fixed rate jumped from 6.22 percent the previous week, according to Freddie Mac. This marks the fourth increase since the war began, reversing a recent downward trend that had briefly pushed rates below 6 percent.

Rising Treasury yields are driving the surge, with the 10-year note hitting 4.38 percent as investors flee to safety amid regional uncertainty. The war has disrupted energy supplies, pushing oil prices higher and fueling inflation fears. The OECD warned that inflation could reach 4.2 percent this year, more than a percentage point above previous forecasts.

The Fed's rate-cut expectations are fading as inflation resurges, creating a feedback loop where higher bond yields push mortgage rates even higher. Oxford Economics projects the war will slow new home construction this year, with lead economist Nancy Vanden Houten noting that higher rates and a softening labor market will weigh on residential spending.