This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
For the week of May 15th to May 21st rates moved higher across the curve early in the week, mortgage rates hit a seven‑week high, and Treasury yields fluctuated as markets digested inflation concerns and awaited Fed minutes. Mortgage demand softened as higher rates continued to pressure affordability.
The effective federal funds rate remained steady at 3.63%, but markets are increasingly focused on the Fed’s tone. Policymakers have emphasized that while inflation has cooled from its peak, progress has been uneven. This has reduced expectations for near‑term rate cuts and contributed to the upward pressure on yields.
Refer to the CME chart below: for the first time in years, economists are beginning to forecast rate increases from September onwards.
FedWatch: Target rate (in bps) possibilities, according to the CME Group (as of 05/21/2026 – 12:00 PM EST):
NAR Pending Home Sales Report Shows 1.4% Increase in April:
Who Drives Remodeling Spending?
Down Payments Fall in 2026 as Housing Market Sags - Realtor.com Economic Research
Uneven Upswing
The key economic problem, and the primary reason the bottom third or half of the population is struggling, is because of the near complete stagnation in real after-tax personal income. Corporate earnings are excellent, due in part to stellar productivity growth, and relative to national income and GDP, they continue to hit new peaks. This buoys equities and turbocharges spending by the wealthy, all part of this K-shaped economic cycle. - Elliot Eisenberg, Economist
News You Can Use:
· Fed officials see rate hike ahead if inflation stays elevated, minutes show
· House approves breakthrough housing bill in a win for investors
· NAR Pending Home Sales Report Shows 1.4% Increase in April
· Single Gen Z women are buying more homes than the men of their generation
· These Midwest Markets Lead the Way as Spring Housing Market Shows Resilience
· Home Purchase Cancellations Are No Longer on the Rise
· Home sales rebound where supply has surged - Zillow Research
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 05/21/2026, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by HomeServices Lending, LLC. Not available in all states. Rate is as of 05/21/2026 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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