Mortgage Rates Today, Thursday, May 28: A Little Lower

Mortgage rates edged lower Thursday, but a fresh inflation report showed consumer prices rising at their fastest pace in nearly three years, clouding the outlook for borrowing costs.

The average interest rate on a 30-year, fixed-rate mortgage slipped to 6.38% APR, down two basis points from Wednesday and 21 basis points from a week ago, according to rates provided to NerdWallet by Zillow ^[1][2]. A basis point is one one-hundredth of a percentage point. The decline, while modest, arrived alongside new data from the Bureau of Economic Analysis showing the Personal Consumption Expenditures Price Index climbed in April at an annual rate of 3.8% ^[2]. The PCE is the Federal Reserve's preferred inflation gauge, and the April reading marked the highest level in nearly three years ^[1][2]. Mortgage rates have been trending higher since the war in the Middle East began, as instability in the region has rattled U.S. bond markets ^[1][2]. Disruptions to oil shipments through the Strait of Hormuz have added to inflationary pressures that were already elevated before the conflict started on Feb. 28 ^[1]. A lasting peace agreement would not cause mortgage rates to reverse course immediately, but it could inject calm into the markets, NerdWallet reported ^[1]. The inflation data arrives ahead of next month's Federal Reserve meeting, the first under incoming Chair Kevin Warsh ^[1]. Minutes from the Fed's April meeting showed some officials growing more concerned that inflation could linger, raising the possibility that rate hikes may not be completely off the table ^[1]. Even the hint of another Fed rate hike could be enough to push mortgage rates higher ^[1].