Mortgage rates took a brief U-turn last week, but they resumed their upward path again this week as hawkish statements from the Federal Reserve over inflation and monetary policy are guiding the direction of borrowing costs.
At HousingWire‘s Mortgage Rates Center on Tuesday, rates for 30-year conforming loans averaged 6.77%, up 4 basis points from one week ago. Rates for 30-year jumbo loans were up 9 bps to 6.75%, while 30-year loans backed by the Federal Housing Administration (FHA) rose 6 bps to 6.35%.
The figures represent a reversal of what happened last week as rates fell across the board.
“Last week’s modest decline in mortgage rates helped sustain borrower interest, with home purchase demand up slightly and continuing to outpace last year’s levels,” Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), said in written commentary.
“Buyers are benefiting from a more balanced housing market as inventory improves and home-price growth moderates in many areas. If these trends continue, they should bolster housing activity through the summer.”
Inflation and home price growth
The Fed isn’t alone in its inflationary concerns. On Tuesday, the Federal Reserve Bank of New York released its Survey of Consumer Expectations for June. The responses from roughly 1,300 households showed that consumers believe the rising inflation trends of the past several months will continue over the short and medium term.
The New York Fed’s report said that median inflation expectations for one year from now increased to 3.7% in June, up from 3.5% in May and the highest level for the monthly survey since September 2023. In May, the Consumer Price Index (CPI) climbed to an annual rate of 4.2%, the fastest pace of growth since April 2023. CPI figures for June will be released July 14.
But the survey also found that median estimates for home price growth dropped to 3.2% annually, down from 3.5% in May and slightly above the 12-month trailing average of 3.1%. Moderate price appreciation across much of the country continues to be a tailwind for housing market growth, despite mortgage rates that remain near the higher end of 2026 forecasts.
Home price data released Tuesday by Cotality showed year-over-year growth of 0.8% in May. Pockets of hotter growth were found in Midwest states like Illinois, Indiana and Nebraska, where annual appreciation ranged from 5% to 5.9%. San Francisco had the highest growth among the country’s 100 largest metro areas at 8.9%, followed by Chicago at 6.2%. Contrary to consumer beliefs, the company expects national price growth to accelerate to 4.8% by April 2027.
At the other end of the spectrum, Cotality noted that markets like Austin (-2.8%) and Cape Coral, Florida (-3.3%) “appear to have hit their price floors” as monthly changes this spring are nearly flat and indicate “active stabilization.”
“The U.S. housing market in mid-2026 remains firmly entrenched in a geographic split, shaped fundamentally by an affordability gap and a wealth gap that continues to divide buyers across the nation,” Cotality chief economist Selma Hepp said in a statement.
“On one hand, buyers who are well-insulated from mortgage rate volatility — bolstered by substantial accumulated home equity and robust wealth gains — are continuing to look at high-value regions like San Francisco, driving a strong near-9% annual rebound in a market that remains fundamentally healthy and structurally undervalued relative to long-term income baselines. On the other hand, elevated mortgage rates, property taxes, insurance and other costs of homeownership continue to keep buyers out of the market.”
Ishbia on the Fed, FHA rules and GSE condo loans
In his monthly “3 Points” video released last week, Mat Ishbia, chairman and CEO of United Wholesale Mortgage (UWM), touched on a few topics tied to mortgage affordability and availability.
Ishbia mentioned the first meeting of the Federal Reserve under new Chair Kevin Warsh. While the central bank in June held benchmark rates steady for a fourth straight meeting and officials are now indicating a rate hike is more likely than a cut in 2026, Ishbia has a different line of thinking.
“The next six to 12 months, it’s going to be more bullish — as in lower rate opportunity — with Kevin Warsh running it than the previous Fed chairman,” Ishbia said, referencing Jerome Powell.
“When this war [in Iran] ends, the CPI data slows down a little bit, there’s a big opportunity for rates to come down … which means refinance opportunity and a positive thing for the mortgage market and for consumers.”
Ishbia also believes the U.S. Department of Housing and Urban Development‘s recent request for information about potential changes to minimum property requirements for FHA loans will be beneficial for the market, if adopted. The last major changes to these regulations occurred more than 20 years ago, and the mortgage industry has sought less stringent regulations for repair conditions, second appraisals and more.
“There’s some unnecessary burdens and things that are maybe outweighing the benefits that [FHA loans] provide, and so they’re really digging into this,” Ishbia said. “The fact that they’re looking at it, asking for public comment, is a positive thing across the board, because they’re saying, ‘Hey, we understand that maybe our policies are a little outdated. We can make this process better.’”
He also touched on pending regulations from the government-sponsored enterprises (GSEs) for condominium projects. Some industry professionals are pushing to delay changes by a year, Ishbia said, over worries that more of these loans will become nonwarrantable under Fannie Mae and Freddie Mac standards. The National Association of Mortgage Brokers (NAMB) are among those opposed to ending the limited review process in favor of higher due-diligence requirements.
“Overall, the industry is saying, ‘We understand what you’re trying to do, but we’ve got to delay this because it’s going to cause a major disruption in the condo market,’” Ishbia said.
