US mortgage rates rise to 6.56%, MBA says

May 20 (Reuters) – The rate on the most popular U.S. home loan rose last week to its highest in seven weeks, as concerns about inflation from higher oil prices and an uncertain outlook for the Iran war pushed benchmark U.S. Treasury yields higher.

The average 30-year fixed-rate mortgage jumped 10 basis points to 6.56% for the week ended May 15, the Mortgage Bankers Association said on Wednesday. The rate was just one basis point shy of the peak set after the Iran war began driving up oil prices in March.

Mortgage applications dropped 2.3% from a week earlier to their lowest level in five weeks, the MBA said. Almost 10% of those seeking home loans wanted an adjustable rate, as those were offered at 80 basis points lower than the average fixed 30-year rate.

The rise in mortgage rates comes just two days before President Donald Trump is due to swear in Kevin Warsh as the Federal Reserve‘s new chair, succeeding Jerome Powell, whom Trump criticized tirelessly for keeping interest rates too high.

Notwithstanding the change in guard, financial markets are betting the central bank will not cut short-term rates at all this year and may actually increase them if higher oil prices work their way into inflation more broadly, as some Fed policymakers say they worry is already happening.

Trump this week told the Washington Examiner that he will let Warsh do as he wishes with rates, and Warsh told lawmakers last month that he has made Trump no promises.

Mortgage rates are only loosely tied to the Fed’s short-term policy rate and follow the 10-year Treasury yield much more closely.

A global selloff in bond markets over the past week as U.S.-Iran peace talks have stalled and energy prices remain elevated has driven the yield on the 30-year Treasury bond to its highest in 19 years, and the yield on the 10-year Treasury note to its highest since January 2025.

(Reporting by Ann Saphir, Editing by Franklin Paul)