Monthly RUNdown - May 2026

Here is your May 2026 Mortgage RUNdown (the best part is at the end) 

Mortgage rates saw some of their biggest swings of the year this month, with the conventional 30-year fixed climbing back into the 6.5%-6.7% range, the highest levels we’ve seen since last summer. Let’s dig into why.

The biggest driver from the last few years showed up again. April CPI came in hotter than expected at 3.8%, reinforcing concerns that the Federal Reserve may need to keep rates elevated for longer. Energy prices have been a major contributor to the inflation story, with oil prices spiking due to tensions involving Iran and uncertainty surrounding the Strait of Hormuz. Higher oil prices feed directly into inflation expectations, which pushes bond yields and mortgage rates higher.

Another major storyline this month was the Fed holding rates steady while continuing to signal caution on inflation. Even with the Fed leaving its benchmark rate unchanged, markets became increasingly concerned that inflation could remain sticky through the second half of the year, keeping upward pressure on mortgage rates. In fact, the bond market is now pricing in roughly a 70% chance of one rate HIKE in 2027. Odds of rate cuts anytime soon remain very low. See the chart below showing less than a 10% chance of a Fed rate cut all the way through December 2027.

The biggest thing to know from an economic and mortgage perspective is that the market is treating the Iran conflict primarily as an inflation story. The concern is not necessarily direct economic damage to the U.S. The fear is that disruptions in the Strait of Hormuz could push oil prices sharply higher, which would then feed into inflation, Treasury yields, and ultimately mortgage rates. About 20% of global oil flows through that shipping route, so markets react aggressively anytime closure risks escalate.

The market is also extremely headline sensitive right now. If tensions cool and oil stabilizes, rates could improve relatively quickly. If conflict expands or shipping disruptions worsen, rates will likely stay elevated longer as inflation expectations rise again.

We welcomed our daughter Zoe on May 12th. So far she’s already eating and sleeping better than our first born, so I’m a big fan. I took a couple weeks off to be with the family but am back to work, so please feel free to send any referrals my way. As much as I’d love to see rates lower, the higher rate environment has pretty much put all refinances on pause for now, which I selfishly don’t mind since it’s giving me a little more time to spend with Amy and the baby