Inflation is a hot topic right now, because it has the potential to affect multiple aspects of our lives — including mortgage rates for people buying homes.
Inflation significantly impacts mortgage rates. When inflation is high, rates also tend to be high. Inflation has been low for over a year during the coronavirus pandemic, so mortgage rates have also been at rock bottom.
The most recent report from the US Bureau of Labor Statistics shows that inflation soared in May. Economists had expected it to grow by 0.04%, but it jumped by 0.06%.
This comes after an 0.08% spike in April, which also exceeded economists' expectations.
So, what does this mean for mortgage rates? So far — nothing.
Current mortgage rates| Type of mortgage | Rates today | Rates 1 month ago | Rates 2 months ago |
| 15-year fixed | 2.36% | 2.51% | 2.59% |
| 30-year fixed | 3.31% | 3.41% | 3.48% |
| 7/1 ARM | 3.91% | 4.78% | 4.44% |
| 10/1 ARM | 3.31% | 4.74% | 4.72% |
Rates from Money.com
You can see that even with higher inflation rates, mortgage rates have actually decreased since this time last month. May's rates also have barely shifted since mid-April, even with increasing inflation.
Current refinance rates| Type of mortgage | Rates today | Rates 1 month ago | Rates 2 months ago |
| 15-year fixed | 2.58% | 2.69% | 2.80% |
| 30-year fixed | 3.69% | 3.81% | 3.78% |
| 7/1 ARM | 4.25% | 4.89% | 4.74% |
| 10/1 ARM | 3.92% | 5.22% | 5.14% |
Rates from Money.com
You'll notice similar trends with mortgage refinance rates. Rates have stayed low over the past two months even though inflation has gone up.
Mortgage interest rates forecastIf the US experiences high inflation for a few more months, mortgage rates could go up later this year.
Why isn't inflation already causing mortgage rates to increase? Because some experts believe the spike is only temporary, and the US needs to experience longer, more reliable change for mortgage rates to respond.
One reason inflation is up over the last couple of months is that businesses are reopening after closing down during the pandemic. So more people are spending, and the demand for goods is surging. There's a good chance inflation will slow down once supply catches up with demand.
Inflation is also drastically higher than this time last year, but that's probably because inflation was already low before the pandemic, so current boosts seem drastic in comparison.
However, the Federal Reserve meets tomorrow and Wednesday, June 15 and 16. The Fed talks about the federal funds rate (which impacts mortgage rates) at these meetings. If the Fed decides the existing high inflation is enough reason to bump up the federal funds rate, you may see mortgage rates increase sooner rather than later.
Mortgage and refinance rates by stateCheck the latest rates in your state at the links below.
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Utah
Vermont
Virginia
Washington
Washington DC
West Virginia
Wisconsin
Wyoming
Laura Grace Tarpley is an editor at Personal Finance Insider, covering mortgages, refinancing, mortgage rates, and lending. She is also a Certified Educator in Personal Finance (CEPF). Over her five years of covering personal finance, she has written extensively about ways to navigate loans.
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