The link between conflict in Iran and mortgage rates

Summary

Podcast Summary: Marketplace Morning Report

Episode: The link between conflict in Iran and mortgage rates
Date: March 4, 2026
Host: Sabri Ben-Achour (in for David Brancaccio)

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Episode Overview

This episode dives into how recent conflict in Iran is directly impacting US mortgage rates and the broader economy. It explains the mechanisms by which geopolitical unrest in the Middle East translates into shifts in the American housing and financial markets, particularly focusing on inflation concerns and mortgage interest rates. Later, the episode examines how large corporations like Amazon and Tesla pay much less than the federal corporate tax rate, highlighting recent changes in tax laws that allow for even greater tax avoidance.

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Key Discussion Points and Insights

1. Conflict in Iran and Its Impact on US Mortgage Rates

[00:54 - 03:06]

• Overview:
  After the US and Israel attacked Iran, US mortgage rates quickly rose above 6%, after having briefly fallen below that threshold. Sabri Ben-Achour and Marketplace's Samantha Fields explain why this happened.

• Mechanism:
  The conflict has destabilized the oil market, causing oil and gas prices to rise. Anticipated higher oil prices lead to fear of inflation, which mortgage lenders quickly price into their rates.

  • “Mortgage rates had recently fallen to under 6%, and then the US and Israel attacked Iran. Mortgage rates proceeded to jump above 6%. Coincidence that is not... This could translate into higher inflation, which mortgage lenders have to factor in, and so mortgage rates went up.” — Sabri Ben-Achour [00:54]

• Expert Analysis:
  Darrell Fairweather (Redfin) describes how uncertainty and volatility almost always follow geopolitical conflicts, but the effect on rates isn’t always predictable:

  • “Sudden conflict and uncertainty almost always cause volatility in the mortgage market, but...you can't always know in advance whether the effect will be negative or positive.” — Darrell Fairweather [01:32]

  Typically:

  • Fear of higher inflation due to rising oil pushes rates up
  • Fear about global stability and economic growth pushes rates down
  • Notable quote: "Fear of higher inflation because of higher oil prices tends to push rates up, but fear about global stability and economic growth tends to push rates down." — Fairweather & Ben-Achour [01:44 - 01:54]

  In this case, inflation concerns are currently the dominant force.

• Economic Indicators:

  • Susan Wachter (UPenn) emphasizes oil's centrality to inflation:
    • “A key price for the inflation rate is oil. If oil markets are destabilized as they are right now... this is clearly going to raise the inflation rate.” — Susan Wachter, via Nancy Marshall Genser [02:05]
  • Mortgage rates move with the yield on 10-year Treasury bonds, which have also reacted to the conflict.
  • Upcoming economic data (labor, retail) could also impact rates—potentially even more than the conflict.

• US Government Response:

  • President Trump has offered military protection to ships and government insurance to help stabilize oil markets.
  • This action led to a temporary fall in oil prices.
    • “President Trump is trying to contain the impact of the war on oil prices by offering military protection to ships traveling through the Persian Gulf and offering US government insurance when private insurers are dropping coverage. Oil prices did actually fall after that announcement yesterday.” — Sabri Ben-Achour [02:48]

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2. Government-backed Insurance for Oil Shipping

[03:06 - 04:17]

• Details:
  • The U.S. International Development Finance Corporation (DFC) is now offering political risk insurance to shipping lines, ship owners, and “key maritime insurance providers.”
  • This insurance is replacing withdrawn private war risk insurance due to conflict in the Persian Gulf.
  • US Navy escorts may accompany ships, though there are questions about naval capacity in the region.
  • “The DFC specializes in public-private partnerships, usually in developing nations... It's not clear there are enough U.S. ships in the area to do that.” — Nancy Marshall Genser [03:06]

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3. Corporate Tax Rates and New Tax Breaks

[05:20 - 08:20]

• Overview:
  Many large U.S. corporations pay far less than the statutory 21% federal corporate tax rate—sometimes as little as 4.9%, per the Institute on Taxation and Economic Policy.

• Expert Interview:
  Matthew Gardner (Institute on Taxation and Economic Policy) explains that recent laws have expanded tax breaks even more:

  • New breaks effective this year include “R&D expensing” and “bonus depreciation,” allowing companies to immediately write off large expenses and massively reduce their taxable income.
  • “R&D expensing just means that companies can write off all the research and development expense in the very first year rather than having to amortize them over time as they had to before this year. The other one is bonus depreciation...does the same thing...for the buildings, the factories in which these things sit.” — Matthew Gardner [06:06]

• Policy Arguments:

  • Supporters claim these provisions spur investment and growth, but Gardner notes that “no one's been able to find any econometric evidence showing conclusively that these rules actually encourage economic growth at all.”
  • Notable quote: “If anything, the most obvious takeaway is that these tax breaks are simply rewarding companies for doing what they were going to do anyway.” — Matthew Gardner [07:03]

• Scale of Tax Reductions:

  • Gardner warns that S&P 500 companies “will overall be paying something less than 10% of their income in corporate taxes, which means they'd be sheltering more than half of their income from U.S. tax.” [07:50]

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Notable Quotes and Memorable Moments

• “Mortgage rates had recently fallen to under 6%, and then the US and Israel attacked Iran. Mortgage rates proceeded to jump above 6%. Coincidence that is not.” — Sabri Ben-Achour [00:54]
• “Sudden conflict and uncertainty almost always cause volatility in the mortgage market, but...you can't always know in advance whether the effect will be negative or positive.” — Darrell Fairweather [01:32]
• “A key price for the inflation rate is oil... this is clearly going to raise the inflation rate.” — Susan Wachter, via Nancy Marshall Genser [02:05]
• “If anything, the most obvious takeaway is that these tax breaks are simply rewarding companies for doing what they were going to do anyway.” — Matthew Gardner [07:03]
• “These companies will overall be paying something less than 10% of their income in corporate taxes.” — Matthew Gardner [07:50]

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Timestamps for Key Segments

• [00:54] — Major Middle East conflict pushes US mortgage rates up, mechanism explained
• [01:32] — Redfin's Darrell Fairweather on volatility, uncertainty, and rate direction
• [02:05] — Role of oil prices in inflation and mortgage rates, with Susan Wachter and Nancy Marshall Genser
• [02:48] — Government steps in with protection and insurance for oil shipping
• [05:20] — Corporate tax avoidance and breakdown of new tax breaks with Matthew Gardner
• [07:03] — Policy arguments and evidence on effectiveness of new tax breaks
• [07:50] — Scale of corporate tax reductions post-legislation

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Conclusion

This episode highlights the swift and wide-ranging economic ripple effects of geopolitical events, especially in a globalized economy. It provides listeners with accessible expert analysis on how a war halfway across the globe affects American mortgage rates almost overnight and also sheds light on the ongoing issue of corporate tax avoidance in the US.

For those following the headlines, or anyone interested in understanding the real-world links between foreign conflict, oil prices, and your wallet, this concise Marketplace Morning Report delivers quick, clear, and insightful reporting.

Transcript

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[Sabri Ben-Achour]

what war in the Middle east has to do with Mortgage Rates From Marketplace I'm Sabree Ben, ashore in for David Brancaccio. Mortgage rates had recently fallen to under 6%, and then the US and Israel attacked Iran. Mortgage rates proceeded to jump above 6%. Coincidence that is not a threatened oil market has already started to push up gas prices, which could translate into higher inflation, which mortgage lenders have to factor in, and so mortgage rates went up. Marketplace's Samantha Fields has more on how waves from a war a half a world away are landing on the shores of the US Housing market.

[Darrell Fairweather]

Sudden conflict and uncertainty almost always cause volatility in the mortgage market, but Darrell Fairweather at Redfin says you can't always know in advance whether the effect will be negative or positive.

[Sabri Ben-Achour]

Fear of higher inflation because of higher

[Darrell Fairweather]

oil prices tends to push rates up,

[Sabri Ben-Achour]

but fear about global stability and economic

[Darrell Fairweather]

growth tends to push rates down this time so far. Susan Wachter at the University of Pennsylvania says concerns about rising oil prices seem to be winning out.

[Nancy Marshall Genser]

A key price for the inflation rate is oil. If oil markets are destabilized as they are right now, and if oil prices their significant increase continues, this is clearly going to raise the inflation rate.

[Darrell Fairweather]

Fear of that happening is what has pushed the yield on 10 year treasury bonds up and mortgage rates up along with it. But Fairweather at Redfin says there are other factors at play too.

[Matthew Gardner]

We're going to get some economic data

[Sabri Ben-Achour]

later this week about what's happening in

[Darrell Fairweather]

the labor market, what's happening with retail spending, and she says that data could have as much or more of an impact on mortgage rates than the conflict in the Middle East. I'm Samantha Fields for Marketplace President Trump

[Sabri Ben-Achour]

is trying to contain the impact of the war on oil prices by offering military protection to ships traveling through the Persian Gulf and offering US Government insurance when private insurers are dropping coverage. Oil prices did actually fall after that announcement yesterday. Marketplace's Nancy Marshall Genser has that President

[Nancy Marshall Genser]

Trump says the U.S. international Development Finance Corporation, or DFC, will provide political risk insurance, which covers losses from things like war and political unions. In a social media post, the president says the insurance will be available to all shipping lines. The DFC is offering support to commercial shipping charters, ship owners and what it calls key maritime insurance providers. The DFC specializes in public private partnerships, usually in developing nations. It's not clear how much the insurance will cost. The DFC is trying to replace private war risk insurance that's been withdrawn for ships going to the Persian Gulf. Oil shipments through the Strait of Hormuz have mostly been blocked after threats from President Trump says the U.S. navy will escort ships through the strait if necessary, but it's not clear there are enough US Ships in the area to do that. I'm Nancy Marshall Genser for Marketplace.

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[Sabri Ben-Achour]

rate is allegedly 21%, but a lot of big companies like Amazon, Meta Alphabet and Tesla actually pay much less than that. This year, these companies collectively paid 4.9%, according to the Institute on Taxation and Economic Policy. This is not new, but changes from the Republican tax and spending law signed last summer may help these companies get even bigger tax breaks. For more, we're joined by Matthew Gardner. He's a senior fellow at the Institute on Taxation and Economic Policy.

[Matthew Gardner]

Welcome good Morning.

[Sabri Ben-Achour]

Now, a lot of these tax breaks for major corporations come from President Trump's 2017 tax cuts. The recent tax and spending bill that was passed this summer adds more tax breaks. What are they?

[Matthew Gardner]

The two big ones are R and D expensing and bonus depreciation. R and D expensing just means that companies can write off all the research and development expense in the very first year rather than having to amortize them over time as they had to before this year. The other one is bonus depreciation, which does the same thing, allows companies to immediately write off their capital expenses rather than depreciating them over time, and does the same thing not just for capital equipment, the machinery buying to make stuff, but also the buildings, the factories in which these things sit. Which means they're going to get a bonanza of tax cuts in the very first year, 2025, enough to take away three quarters of the tax they ought to be paying.

[Sabri Ben-Achour]

Is there a public policy argument for some of these tax breaks? Like it would spur investment, you know, increase spending, something like that.

[Matthew Gardner]

If you ask the folks who supported these changes and who pushed it through last year, what they would say I think is bonus depreciation in particular is designed to encourage more capital investment, which then encourages economic growth. The difficulty with this argument is that no one's been able to find any econometric evidence showing conclusively that these rules actually encourage economic growth at all. If anything, the most obvious takeaway is that these tax breaks are simply rewarding companies for doing what they were going to do anyway.

[Sabri Ben-Achour]

You've written the Trump tax cuts have allowed companies to pay federal income tax at record low rates. Like how record low? How drastic are these tax breaks?

[Matthew Gardner]

I've never seen anything like this. It's entirely possible that when the dust is settled and you look at all The S&P 500 corporations, you know, the, the companies that represent the lion's share of the US economy, that these companies will overall they paying something less than 10% of their income in corporate taxes, which means they'd be sheltering more than half of their income from US Tax.

[Sabri Ben-Achour]

Matthew Gardner is a senior fellow at the Institute on Taxation and Economic Policy. Thank you so much.

[Matthew Gardner]

Thank you.

[Sabri Ben-Achour]

In New York, I'm Sabri Ben, ashore with the Marketplace morning Report from 8pm American Public Media.

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