Mortgage rates surged to their highest weekly average in more than a year as markets continue to grapple with inflation concerns.
As of Thursday, the 30-year, fixed-rate mortgage averaged 6.71%, according to mortgage giant Freddie Mac. It's the highest weekly average since July 2025.
The 15-year, fixed-rate mortgage also increased, averaging 6.04% on a weekly basis as of Thursday.
Daily mortgage rates also rose: As of Wednesday afternoon, lenders were offering a 30-year, fixed-rate mortgage at an average of 6.91%, up from a day earlier, according to Mortgage News Daily. The 15-year, fixed-rate mortgage was also higher, at 6.5%, an 11-basis-point increase from the previous day.
Unlike Freddie Mac's data, Mortgage News Daily accounts for upfront costs in its daily mortgage rate index.
Inflation fears
Daily measures of mortgage rates have been rising for nearly a week following a speech Federal Reserve Chairman Kevin Warsh gave on Friday.
In his address, 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."
That message added to growing fears of long-term inflation that have permeated market behavior, especially as it suggested the Fed might raise interest rates later this year. To be sure, the Fed sets short-term interest rates, not mortgage rates, but its policies affect other parts of the market.
Supply and demand
With that in mind, the supply-and-demand balance — the supply of capital from investors and the demand for mortgages from homebuyers — affecting the mortgage market is off-kilter, according to Brad Case, chief residential economist for Homes.com.
On the one hand, "homebuying has been stronger than expected simply because many people put off homebuying over the last three years and are ready to buy even with rates and prices high," he told Homes.com News.
Indeed, the latest data from the Mortgage Bankers Association shows that mortgage demand inched higher as some buyers saw an opportunity amid rising inventory despite the higher rates.
At the same time, according to Case, mortgage lenders have to borrow from bond investors, and "bond investors are worried about inflation, the federal government's fiscal policy and the federal government's foreign policy."
"Because of that uncertainty, bond investors demand a higher interest rate before they're willing to make longer-term loans," he said. "That 'term premium' is higher now than it has been at any time since early 2011 — another time when investors were especially concerned about high inflation and the federal government's policy response."
In other words, there's no indication that mortgage rates will see any relief in the immediate future, especially if inflation concerns continue or worsen.
This story was originally reported by Moira Ritter for Homes.com News.