Mortgage rates barely nudged upward this week, but today's inflation report suggests borrowers shouldn't expect rates to fall much anytime soon. With inflation accelerating at its highest level since April 2023, this data reinforces expectations that borrowing costs will remain elevated.
The average rate on a 30-year fixed-rate mortgage rose two basis points to 6.33% APR in the week ending June 25, according to rates provided to NerdWallet by Zillow. (A basis point is one one-hundredth of a percentage point.) We calculate our weekly average using daily APRs recorded over the past five business days.
This week, we’ve seen some ups and downs as daily mortgage rates are tugged in opposite directions. On one hand, cooling tensions with Iran have lowered oil prices nearly to pre-war levels, which eases worries about the ripple effects of high energy prices. While today's inflation report doesn't yet reflect those lower energy costs, they could help cool price growth in the months ahead.
Inflation was already slightly elevated before the war started, and its effects could linger even if an official peace agreement is reached in Iran. Last week, the Federal Reserve signaled it is unlikely to lower the federal funds rate this year — and might even raise it — in an effort to keep inflation under control.
The Fed doesn't directly set mortgage rates, but its benchmark interest rate — the federal funds rate — affects borrowing costs across the economy. When that rate stays higher, mortgage rates usually follow suit. With many forecasters bracing for a Fed rate hike before the end of 2026, mortgage markets are keeping rates elevated for now, too.
🤓 Kate on Rates: June 25, 2026
Inflation puts upward pressure on mortgage rates
Today, the Bureau of Economic Analysis released its Personal Consumption Expenditures (PCE) price index, which serves as the Federal Reserve’s preferred measure of inflation. The report, showing May data, came in as steep as expected. Prices rose at an annual rate of 4.1%, the highest level in three years. That is notably higher than the Fed’s preferred target of 2%.
Inflation doesn't just make groceries and gas more expensive. It also makes it harder to save for a down payment or closing costs, and can delay the lower mortgage rates many buyers and refinancers have been waiting for.
“Inflationary pressures are bound to hit lower income households first, ultimately spreading to middle income consumers and so on,” says Elizabeth Renter, NerdWallet senior economist. “The squeeze can be particularly pronounced when incomes aren’t keeping up with the higher and higher prices, and rarely do employers adjust worker pay in tandem with inflation.”
For aspiring homeowners, that squeeze can mean postponing a purchase or settling for a smaller home than planned.
An optimistic take: With oil prices retreating as the Iran conflict approaches resolution, some forecasters think May levels are the highest that inflation will get this year. If they're right, mortgage rates could gradually ease in the months ahead — but any relief is likely to be slow.
Mortgage rates remain lower from last summer
Everything is relative when you’re mortgage shopping. Compared to this time last year, today’s mortgage rates actually aren’t too bad. In June 2025, average rates were around 50 basis points higher than this week’s levels.
Even so, inflation can make homeownership feel further out of reach. When every dollar counts, one thing you can control is shopping multiple mortgage lenders. Whether you're buying your first home or considering a refinance, it's worth comparing offers. Even small differences in rates and fees can add up to thousands of dollars over the life of a loan.
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