Mortgage rates continued to increase in May as inflation accelerated. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.41% in May, up 7 basis points (bps) over April. Since the conflict in the Middle East began, the 30-year mortgage rate has increased by 36 basis points. The average 15-year rate averaged 5.76% in May, up 7 bps from April, and up 33 basis points since the end of February. Even so, both rates remain lower than a year ago by 41 bps and 19 bps, respectively.
The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.47% in May, 16 bps higher than the previous month. Stronger-than-expected inflation pushed yields upward, with the 10-year yield reaching as high as 4.6% during the month. Rising energy prices kept inflation high, as fuel oil prices increased 5.8% and gasoline prices rose 5.4%.
Persistently high inflation has also strained household budgets. As people used more of their disposable income or drew down on savings to cover everyday expenses, the personal saving rate fell to 2.6% in April. The rate was the lowest since June 2022 when CPI was at its peak.
