Weekly Mortgage Rates Tick Up as Inflation Flares Again

The average rate on a 30-year fixed-rate mortgage rose four basis points to 6.46% APR in the week ending May 28, marking a fourth consecutive weekly increase as accelerating inflation pressures the housing market, according to rates provided to NerdWallet by Zillow [1]. The Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation gauge, showed consumer prices rose at an annual rate of 3.8% in April — the highest since May 2023 [1]. The data, released by the Bureau of Economic Analysis, reflects rising energy costs tied to instability in the Middle East, where disruptions to oil shipments through the Strait of Hormuz have added to price pressures [2]. "Inflation appears to be quickening, both due to the oil price shock and its downstream effects, and the ongoing impact of tariffs," said Elizabeth Renter, NerdWallet senior economist. "While prices are rising faster than comfortable, incomes are not, putting consumers in an uncomfortable spot" [1]. Since the war in Iran began on Feb. 28, mortgage rates have climbed from the high-5% to the mid-6% range, adding about $100 a month in interest on a $400,000, 30-year fixed-rate mortgage [3]. The increase, while modest week-over-week, compounds affordability challenges for buyers already stretched by higher gas and grocery costs [1]. Bond markets have been rattled by the conflict, and mortgage rates, which tend to follow bond yields, have moved in response [1]. Minutes from the Fed's April 28-29 meeting showed policymakers growing more concerned that inflation could linger, with some officials signaling openness to future rate hikes if price pressures persist [3]. The next Fed meeting, scheduled for June 16-17, will be the first under incoming Chair Kevin Warsh and includes a key economic forecast that could influence mortgage rates through the summer [4]. Fannie Mae's latest housing forecast, released May 12, revised its rate projection upward, with the 30-year rate now expected to remain at 6.3% until the second quarter of 2027, up from a prior estimate of 6.1% by year-end [4]. The Mortgage Bankers Association projects rates ending the year at an average of 6.5% [4]. While government-sponsored entities Fannie Mae and Freddie Mac have been buying mortgage-backed securities, cushioning rates from rising even further, those purchases can only do so much [4]. Home buyers waiting for a clear downward turn in borrowing costs may need to prepare for rates to stay elevated [3].