May 15, 2026 4:53 PM
Ask any parent. A lot can change in 9 months. Same story for mortgage rates. During that time, the average 30yr fixed rate dropped 0.65% only to move back up just as much as of the end of the week. This week alone accounted for a 0.23% increase for the average lender as hope quickly faded for a quick end to the Iran war.
The war itself has been responsible for essentially all of the 0.65% jump. Here’s why:
Rates are based on bonds
Bonds hate inflation
The higher fuel prices associated with the war imply more inflation
Thus, higher inflation = higher rates, all else equal
In addition, the war implies additional funding needs for the government. The issuance of more debt is a key funding source for the government and higher debt issuance begets higher rates, all else equal.
Fresh data out this week showed the inflationary impact of the war flowing through to the domestic economy. The Consumer Price Index (CPI) hit its highest level since 2023. Even if we focus on Core CPI (which excludes food and energy categories), annual inflation was the highest since 2025 and monthly inflation came in tied for the fastest pace since 2023.
Wholesale level inflation was even worse according to the Producer Price Index (PPI), with the annual rate surging to 6.0%–the highest since late 2022. Core PPI was also the highest since 2022 at 5.2%.
But inflation data itself wasn’t as big of a deal this week. The market pushed rates higher right when the war began because it expected these numbers to surge. In other words, the market infers inflation impact based on breaking developments.
On that note, Friday was the worst day we’ve seen since the start of the war. A certain portion of the trading community was hoping that this week’s Trump/Xi summit would set the stage for a diplomatic shift that accelerated a peace deal with Iran. As soon as the summit ended without any news of the sort, the bond market immediately began moving higher in yield/rate.
By the end of the day on Friday, 10yr Treasury yields were up more than 0.11% to the highest levels in a year. Mortgage rates “only” back to August levels thanks to increased bond buying on the part of Fannie and Freddie. These purchases of mortgage-backed securities have helped narrow the spread between mortgage rates and Treasury yields.
Looking ahead, the market will remain sensitive to war-related developments. Rates could certainly move back down if a peace deal is achieved soon, but as this week showed, they have no problem moving higher when hopes for a peace deal fade.
Recently Released Economic Data
Time
Event
Period
Actual
Forecast
Prior
Monday, May 11
10:00
Existing home sales (ml)
4.02M
4.05M
3.98M
Tuesday, May 12
8:30
y/y Headline CPI (%)
3.8%
3.7%
3.3%
Wednesday, May 13
8:30
PPI y/y
4.9%
Thursday, May 14
8:30
May/09
Jobless Claims (k)
May/09
211K
205K
200K
8:30
Retail Sales (%)
0.5%
1.7%
Friday, May 15
8:30
NY Fed Manufacturing
19.60
11.00
9:15
Industrial Production (%)
0.7%
0.3%
-0.5%
Tuesday, May 19
10:00
1.4%
1.5%
Wednesday, May 20
14:00
FOMC Minutes
Thursday, May 21
8:30
May/16
Jobless Claims (k)
May/16
209K
210K
211K
8:30
Philly Fed Business Index
-0.4
26.7
Friday, May 22
10:00
Consumer Sentiment (ip)
44.8
48.2
49.8
Event Importance:
Low
Moderate
Important
Very Important
Around the Web
Friday, May 15, 2026
Treasury yields surge as inflation data points to tricky rates path for new Fed chair Warsh
CNBC
Purchase Activity Lifts Mortgage Applications Despite Higher Rates
Mortgage News Daily
April Housing Inflation Data Fills in The Dots That Went Missing During The Government Shutdown
Mortgage News Daily
Servicer Retention Fell in Q1, But Remains at Multi-Year Highs
Mortgage News Daily
Bond bears show their claws
CNBC
Thursday, May 14, 2026
Retail sales up 0.5% in April, as expected
CNBC
Inflation is most ‘pressing risk’ to US economy, Fed’s Schmid says
Reuters
Wednesday, May 13, 2026
US PPI Final Demand for April 1.4% vs 0.5% est. YoY 6.0% vs 4.9% estimate
Investing Live
Residential Construction Input Prices Move Higher In April
Eye on Housing
Minneapolis Fed Pres. Kashkari: Inflation is too high
Investing Live
Tuesday, May 12, 2026
Consumer prices rose 3.8% annually in April, the highest since May 2023
CNBC
Fed’s Goolsbee:Inflation is going the wrong way, not just in oil and tariff related things
Investing Live
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Average Mortgage Rates
Mortgage News Daily
Freddie Mac
Rate
Change
Points
30YR Fixed
6.87%
+0.06
15YR Fixed
6.38%
+0.03
30YR FHA
6.40%
+0.03
30YR Jumbo
6.92%
+0.02
7/6 SOFR
6.42%
+0.09
30YR VA
6.42%
+0.05
Rate
Change
Points
30YR Fixed
6.78%
-0.10
0.66
15YR Fixed
6.10%
-0.01
0.90
30YR FHA
6.46%
-0.13
0.82
30YR Jumbo
6.73%
-0.15
0.50
7/6 SOFR
5.98%
-0.18
0.88
Rate
Change
Points
30YR Fixed
6.66%
+0.45
0.00
15YR Fixed
5.98%
+0.51
0.00
MBS and Treasury
Price / Yield
Change
UMBS 5.5
98.91
–0.10
UMBS 6.0
101.06
–0.07
10 YR Treasury
4.777
+-0.19
30 YR Treasury
5.272
+-0.44
Pricing as of:
8/31 10:54PM
Recent Housing Data
Value
Change
Mortgage Apps
245.3
-0.97%
4.06M
-0.73%
Builder Confidence
2.94%
Building Permits
1.44M
5.56%
Housing Starts
1.24M
-13.17%
259 W Channel Rd
Source: US Housing Market Weekly — Jay Bridges, Mortgage Lender, Priority Capital Corporation