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Mortgage rates in the United States moved higher in the past week, with the average 30-year fixed home loan rate rising to 6.56%, according to data released by the Mortgage Bankers Association (MBA). The increase came as rising oil prices, uncertainty around the Iran conflict and concerns over inflation pushed U.S. Treasury yields upward. Home loan demand weakened during the same period, with mortgage applications falling to a five-week low. Markets are also closely watching the upcoming leadership change at the Federal Reserve, although investors largely expect interest rates to remain elevated amid continuing inflation concerns.
Mortgage rates in the United States increased in the past week, reaching their highest level in nearly two months as rising Treasury yields continued to pressure borrowing costs. Advertisement
Data released by the Mortgage Bankers Association showed that the average rate on a 30-year fixed mortgage rose by 10 basis points to 6.56% for the week ended May 15. The latest level was just one basis point below the peak recorded in March, when the Iran conflict and higher oil prices had first triggered concerns around inflation and financial markets.
The increase in mortgage rates also affected home loan demand. Mortgage applications declined 2.3% compared to the previous week, touching their lowest level in five weeks. The MBA data further showed that nearly 10% of borrowers preferred adjustable-rate mortgages, mainly because those loans were available at rates roughly 80 basis points lower than standard 30-year fixed mortgages.
Financial markets have remained cautious as global bond yields continue to rise. Concerns around stalled U.S.-Iran peace discussions and elevated energy prices have led to a selloff in bond markets over the past week. This pushed the yield on the 30-year U.S. Treasury bond to its highest level in 19 years, while the 10-year Treasury note yield climbed to its highest point since early 2025.
Mortgage rates in the U.S. are more closely linked to the movement of Treasury yields rather than directly following the Federal Reserve’s short-term policy rates. As bond yields rise, borrowing costs for housing finance generally move upward as well.
The rise in mortgage rates also comes shortly before President Donald Trump is scheduled to swear in Kevin Warsh as the new chair of the Federal Reserve, replacing Jerome Powell. Trump had repeatedly criticised Powell in recent months over high interest rates.
However, market expectations indicate that the Federal Reserve may keep rates unchanged for the rest of the year. Some investors even expect the possibility of further rate hikes if rising oil prices continue to fuel inflation pressures across the economy.
Trump reportedly told the Washington Examiner in the past week that Warsh would be allowed to make independent decisions on interest rates. Warsh had also informed lawmakers earlier that he had not given Trump any commitments regarding future monetary policy decisions.
Higher mortgage rates have continued to create pressure on the U.S. housing market over the past two years, especially as home prices in several regions remain elevated. Analysts believe sustained borrowing costs above 6.5% could further slow refinancing activity and reduce affordability for first-time homebuyers.
Source Reuters
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