Weekly Mortgage Rates Remain Near 6% As Inflation Heats Up

Tribune Content Agency

For home buyers and mortgage refinancers who can afford an APR around 6%, January has proved to be a good time to shop.

The average 30-year fixed mortgage rate rose six basis points to 5.97% in the week ending Jan. 22, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.

Weekly rates also averaged 5.97% in the week ending Jan. 1 and have remained relatively stable in the three weeks since, despite some daily volatility.

Federal Reserve rates

At next week's Federal Reserve meeting on Jan. 28-29, central bankers are largely expected to hold the overnight borrowing rate steady. This is the rate that banks pay to borrow from each other (called the federal funds rate), which is how they fund loans like mortgages. When this rate changes, mortgage rates usually move in the same direction. Since analysts expect that this target rate is going to remain at 3.5%-3.75%, the Fed's inaction isn't likely to pull lenders too far away from current rates.

This morning, the Bureau of Labor Statistics released the personal consumption expenditure report (PCE) for October and November. The report showed that inflation grew by 2.7% and 2.8% respectively year-over-year, inching further away from the Fed's goal of 2%. This combined with a slow-but-not-terrible job market means that the Fed doesn't have a good reason to cut rates right now — and might not cut again for the rest of this quarter.

Rates react to Davos

The Fed isn't the only thing lenders are watching. Mortgage rates also move with 10-year treasury yields, which shift based on all kinds of factors, including fiscal policy, economic growth projections and international affairs.

For example, attention is currently on President Donald Trump and other government officials convening in Davos, Switzerland for the World Economic Forum. On Saturday. Jan. 17, Trump issued a warning via Truth Social that Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden and the United Kingdom would face tariffs up to 25% until the U.S. is allowed to purchase Greenland.

These threats rocked markets on Tuesday (they were closed on Monday for Martin Luther King Jr. Day), as Treasury yields jumped and the average 30-year mortgage rate spiked 33 basis points from the previous day.

By Wednesday, Trump backpedaled on these new tariffs, posting on Truth Social that "the framework of a future deal" for Greenland had been reached. This pushed the 10-year Treasury yield back down, and mortgage rates fell on both Wednesday and Thursday.

New Fed chair, new rates?

Looking further out, we could soon get an indication of what to expect from mortgage rates in the second half of this year. In an interview from Davos, Treasury Secretary Scott Bessent told CNBC that the president could announce his pick for the next Fed chair as early as next week.

President Trump has publicly pressed the Fed to lower rates, and has indicated that his chair selection must be on the same page. Whenever an official announcement is made, analysts will immediately start speculating about what it will mean for mortgage rates after current chair Jerome Powell exits his role in May.