Interest rates for America’s most common home loan climbed to their highest point in nine months during the week ending May 22, according to new data released Wednesday by the Mortgage Bankers Association.
The 30-year fixed mortgage rate increased by 9 basis points to reach 6.65%, marking the steepest level since August 2025. That was before the Federal Reserve initiated a sequence of rate reductions aimed at preventing additional weakening in employment markets.
Employment conditions have steadied since then, with joblessness remaining at the same 4.3% level recorded last August.
However, price increases have accelerated, with consumer costs jumping 3.8% in April compared to the previous year, up from 2.9% in August. Growing numbers of Fed officials indicate they might need to consider rate increases, concerned that rising costs may not be limited to temporary energy price spikes but could prove more lasting.
Home loan applications fell 8.5% compared to the prior week, the MBA reported, with refinancing activity accounting for much of the decrease.
The recent mortgage rate increase occurred as Kevin Warsh assumed leadership of the Federal Reserve, replacing Jerome Powell, whom President Donald Trump had repeatedly criticized for maintaining elevated interest rates. Following Warsh’s swearing-in ceremony at the White House, Trump stated his expectation for rates to decline.
However, financial markets are currently factoring in the potential for a Fed rate increase before the year concludes.
Home loan rates maintain a loose connection to the Fed’s short-term policy rate, but they track the 10-year Treasury yield much more directly.
Government bond yields have decreased this week amid optimism about a potential agreement to reopen the Strait of Hormuz.
