The war in Iran directly affects the cost of housing thousands of kilometers away – from Frankfurt to New York
The war in the Middle East is not only shaking the oil and bond markets. The shock is now reaching the daily lives of millions of households as mortgage costs skyrocket in the United States and Europe, putting further pressure on an already stressed housing market.
According to the Greek media, citing the Financial Times, although central banks have not yet raised interest rates, banks are already reassessing their mortgage portfolios, anticipating that the war with Iran and rising energy prices will reignite inflation and force the Fed and ECB to tighten monetary policy again.
In Romania, according to BNR data, for new housing loans with a maturity of over 5 years granted to the population in euros, the interest rate decreased marginally between December 2025 and March 2026 from 6.54% to 5.98%, while for new mortgage loans in lei it decreased from 5.88% to 5.73% (between March 2025 and March 2026)
In the US, house prices have returned to pre-relaxation levels
In the United States, the interest rate on a standard 30-year mortgage rose to 6.36%, higher even than the levels in September 2025, before the Federal Reserve begins its rate-cutting cycle.
This growth comes in a housing market that was already facing a serious housing shortage and high financing costs.
Analysts warn that as long as oil prices remain high and the Strait of Hormuz continues to cause concern in markets, mortgage pressures will intensify further.
“Forget Covid-era interest rates”
Buyer sentiment is shifting significantly, with US brokers describing a market where potential buyers have “become accustomed to the idea that low interest rates aren't coming back anytime soon.
“Many have now accepted that they will never see 2% mortgages again in their lifetime,” said one Compass broker.
The situation does not only apply to the US. In Germany, interest rates on popular 10-year mortgages have risen by around 0.3 percentage points in a few weeks to close to 3.6%. For a new loan of €350,000, this translates into an additional cost of around €1,000 per year in interest alone.
In the UK, the growth is even sharper. The average interest rate on a two-year fixed mortgage with a loan-to-value ratio of 75% rose to 5.1% in April from 3.97% at the end of February.
Representatives of the real estate market speak of a “serious blow” to the purchasing power of households.
The war extends to the real economy
Investors are beginning to fear that the war in Iran is not just a geopolitical crisis, but the trigger of a new wave of stagflation.
If traffic through the Strait of Hormuz remains restricted and oil prices continue to rise, price pressures will become more persistent, forcing central banks to raise interest rates again.
Economist John Muelbauer of Oxford University warned that a wrong move between Washington and Tehran could send the global economy into “severe stagflation”.
Fear of “freeze” in the real estate market
Rising mortgage interest rates are expected to reduce demand for housing and put pressure on property prices, particularly if the crisis in the Middle East drags on.
“We will inevitably see a slowdown in transactions and pressure on house prices as rising interest rates feed through to the market,” warns Knight Frank.
In other words, the war that started in the Persian Gulf is now beginning to directly affect the cost of owning a home thousands of kilometers away – from London and Frankfurt to New York and Toronto.
