Navigating the Path of Mortgage Rates: May 15, 2023 Update

MAY 15th, 2023:  Inflation Rises, Mortgage Rates Fall, and Consumer Sentiment Weakens

Last week brought significant developments in the economic landscape, with key indicators pointing to changes in inflation, mortgage rates, and consumer sentiment. In this article, we will delve into the latest data and forecasts, providing insights into what lies ahead.

Inflation Rate Rises in April, Slower Pace Expected in Coming Months:

According to the U.S. Labor Department, April witnessed a 0.40 percent increase in inflation, aligning with analysts’ predictions. This growth surpassed the previous month’s reading of 0.10 percent. The year-over-year inflation rate for April reached 4.90 percent. Although analysts anticipate continued inflationary growth, they project a slower pace throughout 2023.

Core inflation, excluding food and fuel sectors, matched expectations with a 0.40 percent month-to-month increase in April. Year-over-year core inflation stood at 4.90 percent, slightly below the projected and March readings of 5.00 percent.

Mortgage Rates Fall as Jobless Claims Rise:

Last week, Freddie Mac reported a decline in average mortgage rates. 30-year fixed-rate mortgages experienced a four basis point drop, settling at 6.35 percent. Similarly, 15-year fixed-rate mortgages averaged 5.75 percent after a one basis point decrease. Meanwhile, jobless claims saw an increase, with 264,000 claims filed compared to the expected 245,000 and the previous week’s 242,000 initial claims.

Implications for Rental Rates and Home Prices:

As inflation shows signs of deceleration, the rapid rise in rental rates and home prices is expected to ease. The more affordable homeownership options becoming available should diminish the reliance on rental homes. This reduced demand for rentals is anticipated to alleviate the high rental rates prevalent in many metropolitan areas, ultimately addressing housing challenges where affordable options are scarce.

Consumer Sentiment Reflects Weakening Confidence:

The preliminary consumer sentiment survey for May reveals a decline in consumer enthusiasm regarding the current economic conditions. The initial index reading for May was 57.7, falling short of both the projected reading of 63.0 and April’s index of 63.5. This figure represents the lowest reading since November 2022.

Looking Ahead:

This week’s economic reporting will include updates on sales of previously-owned homes, housing market conditions, housing starts, and building permits issued. Additionally, the weekly readings on mortgage rates and jobless claims will be released, providing further insights into the evolving economic landscape.


Last week’s economic indicators showcased the rise in inflation rates, a decline in mortgage rates, and a decline in consumer sentiment. These developments have far-reaching implications for various sectors of the economy. As we await the upcoming economic reports, it remains crucial to monitor these trends to gain a comprehensive understanding of the market’s trajectory.

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