Mortgage Rates Today, Tuesday, May 5: A Little Higher

Mortgage rates edged higher this week as escalating tensions in Iran rattled bond markets, pushing the average 30-year fixed rate above 6.29%, according to industry data.

The average interest rate on a 30-year, fixed-rate mortgage rose to 6.29% APR on Tuesday, according to rates provided to NerdWallet by Zillow ^[1]. A separate NerdWallet report on Wednesday cited a rate of 6.38% APR ^[2]. The two reports, published a day apart, reflect ongoing volatility in mortgage pricing.

The Iran war has been a primary driver for mortgage rates as investors react to geopolitical uncertainty ^[2]. Escalating tensions in the region have markets rattled and mortgage rates back on the rise, though Tuesday's rates were only a little bit higher than the previous day's ^[1]. Concerns about rising fuel prices due to Iran's strategic importance as an oil producer and its position bordering the Strait of Hormuz have contributed to inflation fears ^[1].

Those inflation fears have been shaking up the bond market. Mortgage rates are benchmarked to the 10-year Treasury note. NerdWallet reported on Tuesday that the yield on the 10-year Treasury note rose sharply throughout March and only eased slightly in April, keeping the average 30-year fixed rate mortgage APR firmly above 6% ^[1]. A Wednesday report noted that the 10-year Treasury yield has remained firm, contributing to mortgage rates staying above 6% ^[2].

At its meeting last week, the Federal Reserve kept its benchmark interest rate the same, marking the third consecutive meeting with no change ^[1][2]. The Fed does not set mortgage rates, but its level of influence over U.S. markets means that mortgage rates' moves often anticipate the central bank's actions ^[1].

Looking ahead, there is a possibility rates could decline. One report noted that mortgage interest rates are starting out high, but there is a strong possibility they will go lower if the administration's statements about the situation in Iran pan out ^[2]. Markets have been showing some fatigue when reacting to news from the Middle East, which has brought somewhat more stable mortgage rates even if they remain elevated ^[1].