After a relatively calm August in the mortgage market, borrowing costs soared to their highest average in 2026 on Monday.
The 30-year, fixed-rate mortgage averaged 6.87% by the afternoon, according to Mortgage News Daily. That's six basis points higher than Friday's average, which was already a three-week high.
The 15-year, fixed-rate mortgage had also climbed, averaging 6.38% by the end of the day on Monday.
It's an even starker difference from the same time last year, when the 30-year, fixed-rate mortgage averaged 6.5% and the 15-year, fixed-rate mortgage averaged 5.86%.
While daily rates are notoriously reactive and volatile, Monday's data offers a glimpse at what could be coming for the mortgage market.
Warning on inflation
Indeed, the recent increase in daily rates follows Kevin Warsh's first speech as chairman of the Federal Reserve at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming, on Friday.
In his speech, Warsh issued a much more aggressive warning on inflation than markets and investors expected.
"Progress over the past two years has been modest," he said, adding that recent data has yet to suggest "that underlying trends have meaningfully improved."
Markets took that as an indication that the Fed sees interest rates staying higher for longer, with the possibility of a rate hike later this year. The Fed itself sets short-term interest rates, not mortgage rates, but its policy affects other parts of the market.
Higher for longer
In this case, "what matters is that the market took away a hawkish message from Warsh and the bond market reacted immediately," Matthew Graham, chief operating officer at Mortgage News Daily, wrote in a Friday blog post.
"Mortgage rates were fairly flat before that, but the average lender increased mortgage rates in response to the bond market movement seen after Warsh's speech," he added.
More than that, markets are still contending with the ongoing war with Iran, which has continued to snarl supply chains, increasing inflationary pressures and complicating borrowing costs.
Taken together, Monday's increase in daily mortgage rates is "an unmistakable sign that global conditions are more likely to drive up inflation even more rather than to ease it down," Brad Case, chief residential economist for Homes.com, said in an email.
"The increased risk of higher inflation would absolutely show up in longer-term borrowing rates, including mortgage rates," he added.
This story was originally reported by Moira Ritter for Homes.com/News.