Mortgage rates jump to highest level since March on hotter inflation reports

• The 30-year fixed mortgage rate rose 15 basis points from the prior Friday to 6.57%, with rates up roughly 40 basis points since February
• Home showings in April increased 8% year-over-year across all U.S. regions, driven by cooling home prices, though inventory remains 11-12% below normal levels
• Buyer purchasing power has declined approximately 4% from February levels due to the rate increase, making homes less affordable than early 2026 but more affordable than last year

Summary

Key Development:

The average 30-year fixed mortgage rate jumped to 6.57% on Wednesday, marking the highest level since March and climbing 15 basis points from the previous Friday. The spike was triggered by hotter-than-expected inflation data from the Producer Price Index (PPI) report released Wednesday, following Tuesday's Consumer Price Index (CPI) report.

Market Drivers:

Bond yields rose in response to the inflation reports, pulling mortgage rates higher. Additional upward pressure came from complications in Iran war negotiations. However, analysts at Mortgage News Daily note that PPI typically has less market impact than CPI, and bonds are anticipating a corrective drop once the war concludes.

Year-Over-Year Context:

Current rates remain below last year's levels of approximately 7%, though they've increased roughly 40 basis points since February. This translates to a 4% reduction in homebuyer purchasing power compared to early 2026.

Housing Market Impact:

The spring real estate market, which stalled in March, had been showing signs of recovery before the rate surge. The National Association of Realtors reported an 8% year-over-year increase in April home showings across all four U.S. regions, driven partly by cooling home prices. However, housing inventory remains constrained at 11-12% below normal levels, according to ICE's Andy Walden.

Bottom Line:

While affordability has improved compared to last year's 7% rates, the recent spike diminishes the gains seen in early 2026, potentially dampening the nascent spring housing market recovery amid persistent inventory shortages.