Sen. Elizabeth Warren (D-Mass.) is pointing a finger at President Donald Trump's Iran policy for the recent spike in mortgage rates, arguing that the administration's actions are making it harder for everyday Americans to buy a home.

Warren Links Iran Policy to Mortgage Rates

On Saturday, Warren took to X to blame Trump's approach to Iran for the jump in borrowing costs, saying the administration's moves have fueled economic uncertainty and worsened housing affordability.

"BREAKING: Mortgage rates jumped to the highest level in more than a YEAR thanks to Donald Trump's war with Iran," she wrote. "Trump doesn't care if you can afford to buy a home."

Mortgage Rates Near 7% Freeze Housing Market

The Kobeissi Letter, a financial analysis firm, warned that rates approaching 7% could put the U.S. housing market in a deep freeze. Homeowners who locked in 3% mortgages back in 2021 would face a massive jump in costs if they moved, with monthly payments on a $500,000 home potentially rising by nearly $1,000. That kind of sticker shock discourages people from selling, which tightens supply even further and deepens the slowdown.

Mortgage Rates Hit Housing Market

Last month, the average 30-year fixed mortgage rate climbed to 6.66%, its highest level in over a year, according to Freddie Mac. Rising inflation worries, expectations about Federal Reserve policy, and geopolitical tensions have all pushed long-term borrowing costs higher.

Morgan Stanley's housing outlook suggests affordability won't return to pre-2022 levels even if rates fall. The firm projects rates could ease toward 5%, but mortgage payments would still eat up about 21% of household income, above historical averages. With roughly 70% of homeowners holding rates below 5%, many are choosing to stay put, limiting supply and keeping prices elevated.

Economist Mohamed El-Erian has also weighed in, warning that housing affordability remains under severe strain. Citing the Burns Affordability Index, he noted that buyers are spending about 42% of their income on housing costs, a figure that remains "extremely unaffordable" even after improving from a peak of 48% in late 2023. The index measures housing costs based on a median-priced existing home purchase with a 10% down payment.

The bottom line? High rates, limited inventory, and rising costs are squeezing buyers from all sides, and the path back to a normal housing market looks long and bumpy.