Weekly Mortgage Rates Tick Up as Inflation Flares Again

The average rate on a 30-year fixed-rate mortgage increased four basis points to 6.46% APR for the week ending May 28. Mortgage rates have been moving higher for four consecutive weeks, with changes linked to instability in the Middle East that has rattled bond markets. Mortgage rates tend to follow bond yields, so they have been jumpy as headlines shift. New inflation data from the Bureau of Economic Analysis showed consumer prices accelerating in April at the fastest annual pace in nearly three years. Rising energy prices tied to conflict-related oil supply risks are contributing to inflation. The Personal Consumption Expenditures Price Index rose at a 3.8% annual rate in April, the highest since May 2023.

"The average rate on a 30-year fixed-rate mortgage rose four basis points to 6.46% APR in the week ending May 28, according to rates provided to NerdWallet by Zillow. (A basis point is one one-hundredth of a percentage point.) We calculate our weekly average using daily APRs recorded over the past five business days."

"All things considered, four basis points is a relatively modest increase given the ongoing instability in the Middle East. This week brought a mix of headlines, from new U.S. strikes on Iranian targets to a possible peace framework that could reopen the Strait of Hormuz, a key route for global oil shipments. Since the war in Iran began, bond markets have been rattled by every twist in the conflict. Today's mortgage rates tend to follow bond yields, so they've been jumpy, too."

"New inflation data released this morning from the Bureau of Economic Analysis showed consumer prices accelerating in April at their fastest annual pace in nearly three years. Rising energy prices tied to the conflict in the Middle East are contributing to inflation. Any disruption to the world's oil supply puts upward pressure on energy prices. As energy costs rise, so do transportation costs - and, in turn, inflation follows like a shadow."

"Under that pressure, the Personal Consumption Expenditures Price Index (PCE) showed inflation rose in April at an annual rate of 3.8% - the highest since May 2023, when the economy was still recovering from pandemic-era supply chain shocks. That's a grim statistic, but it shouldn't come as a surprise if you've filled up your gas tank or grocery cart in the past few months."

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