Weekly Mortgage Rates Rise as Fed Preps for a New Era

"Mortgage rates ended last week on an optimistic note, as markets were encouraged by news of peace talks between Washington and Tehran. The conversation this week is much more dour. On Wednesday, the Senate blocked efforts to end the war, the seventh such measure put forth by Democrats. Tuesday saw the release of the April consumer price index (CPI), which showed that inflation accelerated at its fastest pace since May 2023. This spike was driven largely by increased energy costs as a result of the conflict in Iran."

"All of this Bad News (from the bond market's perspective) has mortgage rates inching upward. The average rate on a 30-year fixed-rate mortgage rose one basis point to 6.25% APR in the week ending May 14, 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 last five business days."

"Inflation and borrowing rates have a push-pull relationship. When inflation gets too high, the Federal Reserve will sometimes raise short-term borrowing rates (which usually causes mortgage rates to rise) to ease demand and force prices back down. Except ... this can be an unpopular move. There's a sort of "when it rains, it pours" sentiment; consumers might think, "Great, gas and groceries are already skyrocketing, and now interest rates are going up even more.""

"In theory, the Fed is supposed to be an apolitical guiding hand for the nation's monetary policy. However, President Trump has used his office to wage a long intimidation campaign against Fed chair Jerome Powell in an effort to direct central bankers toward more politically popular results. This campaign included a criminal investigation by the Department of Justice into Powell's statements about a renovation of the Fed's he"

Mortgage rates moved higher after markets shifted from optimism about Washington-Tehran peace talks to more negative developments. The Senate blocked efforts to end the war, and the April consumer price index showed inflation accelerating at the fastest pace since May 2023. The increase was driven largely by higher energy costs tied to the Iran conflict. From the bond market perspective, these bad signals pushed mortgage rates upward. The average 30-year fixed-rate mortgage rose one basis point to 6.25% APR for the week ending May 14, based on daily APRs over the prior five business days. Even if the conflict ended quickly, economic effects could persist and influence borrowers’ home-buying ability. The Federal Reserve’s response to inflation could further affect borrowing rates.

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