"Treasury yields are falling again thanks to U.S./Iran geopolitical concerns," said Matthew Graham, chief operating officer of Mortgage News Daily. "Modest gains in MBS will add up to another slight improvement in mortgage rates and thus the 3rd day in a row we can claim the lowest rates in about a month."

While mortgage rates are determined by mortgage-backed securites (MBS), they tend to loosely follow the yield of the U.S. 10-year Treasury note.

The average rate on the U.S. 30-year fixed mortgage is now at the lowest level in a month, thanks to a run on the bond market overnight. Investors fled to the relative safety of bonds, after the U.S. confirmed an airstrike on Iran's highest military commander.

Mortgage rates had been falling over the past few days, despite a rise in Treasury yields. MBS tends to perform better than Treasurys when there is upward pressure because they are shorter term.

"30-year fixed rates of 3.75% will be most prevalent for flawless scenarios, but 3.625% is definitely out there," said Graham. "That was already the case yesterday, but it will be solidified a bit by today's gains."

Upfront costs also saw a modest improvement Friday morning. A weaker-than-expected report on manufacturing Friday only solidified the lower bond yields. The Institute for Supply Management said its manufacturing index fell to the lowest level since June 2009, citing trade as, "the most significant cross-industry issue."

The average rate on the 30-year fixed mortgage is now about 87 basis points lower than it was a year ago, which translates into pretty big savings for homebuyers, especially on the lower end of the market. Home prices have begun to reheat, after pulling back for much of last year.

"The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices," wrote Sam Khater, chief economist at Freddie Mac, in a release Thursday.

WATCH: What to expect from housing in 2020