Mortgage Rates Today, Tuesday, May 26: Lower, For Now
- company NerdWallet
- company Zillow
- location Iran
- location Middle East
- location Pittsburgh
- location U.S.
- person Abby Badach Doyle
- person Jeanette Margle
The average rate on a 30-year fixed-rate mortgage fell this week as diplomatic talks between the U.S. and Iran showed progress, though analysts cautioned the decline may be temporary.
NerdWallet reported on Tuesday that the average interest rate on a 30-year, fixed-rate mortgage dropped to 6.46% APR, according to data provided by Zillow [1]. By Wednesday, the rate had edged lower to 6.4% APR, six basis points below the prior day's figure [2]. A basis point is one one-hundredth of a percentage point.
Mortgage rates have been trending higher since the conflict began on February 28, as instability in the Middle East rattled U.S. bond markets [2]. The recent decline was attributed to hopeful news that the U.S. and Iran are moving further along in discussing terms to end the conflict [2]. However, a lasting peace agreement would not cause mortgage rates to reverse course immediately, though it would inject calm into the markets [2].
Rates remain sensitive to a range of factors including inflation reports, job numbers, Federal Reserve meetings, and global news [1]. New U.S. strikes in Iran were cited as likely to influence bond markets this week and could push mortgage rates higher [1].
Attention is turning to Thursday's release of the Personal Consumption Expenditures Price Index from the Bureau of Economic Analysis, which contains the Federal Reserve's preferred inflation measure [2]. If the PCE shows inflation picking back up, the next Fed meeting could get uncomfortable fast [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 [2]. Even the hint of another Fed rate hike could be enough to push mortgage rates higher [2].
Inflation was already elevated before the war began, and disruptions to oil shipments through the Strait of Hormuz have added to those pressures [2]. A peace agreement would not suddenly solve inflation but could turn down the heat [2]. The upcoming Fed meeting will be the first under incoming Chair Kevin Warsh [2].
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Background sources we checked (6)
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