US mortgage rates little changed despite surging inflation

[WASHINGTON] Mortgage rates in the US were little changed even as the escalating energy crisis drives inflation higher.

The average rate for 30-year fixed loans slipped to 6.36 per cent from 6.37 per cent last week. A year ago, it was 6.81 per cent.

With the key home-selling season underway, consumers were bracing for higher financing costs. But rates stayed roughly flat despite inflation indicators this week signalling a likely increase. 

Inflation accelerated in April on higher petrol and grocery prices, government data showed this week, boosting expectations that the Federal Reserve will raise interest rates. 

“It all goes back to the war and how long it goes for,” said Melissa Cohn, regional vice president of William Raveis Mortgage. “The fact that there’s no end in sight at the moment has a negative impact on the markets.”

Even so, borrowing costs remain below year-earlier levels, easing affordability concerns for buyers and potentially making it easier for homeowners to sell, even if they’ve locked in lower rates on their current mortgages.

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While the peak sales season got off to a slow start, the median home price rose 2.4 per cent in April, the largest annual gain since March 2025, according to Redfin. At the same time, pending sales reached a 2023 high and active listings jumped, suggesting sellers are returning.

By historical standards, the housing market remains weak, and the ups and downs of rates may undermine the recent momentum as the conflict in the Middle East shows little signs of easing.

At the current 30-year average, borrowers with a US$1 million loan would pay about US$6,229 a month, not including insurance and taxes. That’s up from US$5,983 in late February when rates briefly dipped below 6 per cent, right before the US-Israeli bombing campaign began. BLOOMBERG