Mortgage Rates Today, November 12, 2026: Rates Soar on Bad Inflation Report

The bigger picture

Mortgage rates climbed appreciably on Tuesday following a worse-than-expected consumer price index (CPI). We doubt either of today’s economic reports will move those rates far, though other forces might.

However, tomorrow’s producer price index (PPI) might have a noticeable impact if it contains surprises. PPIs measure price changes in the wholesale phase of the supply chain, and those can show up in CPIs in the following months.

Keep reading for much more on the forces affecting mortgage rates today, including two economic reports on this morning's calendar.

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What's coming up?

Normally, economic reports are the main drivers of changes to mortgage rates. But these are not normal times.

And typically, only blockbuster reports, mostly concerning employment and inflation, have had an appreciable impact over much of this year. More important have been the general mood in markets and economically consequential news. News items concerning the war, employment, inflation, tariffs, and deficit funding are especially influential now.

The Fed

On Oct. 28, the Federal Reserve's rate-setting body (the Federal Open Market Committee or FOMC) voted 10-2 to hold the federal funds rate steady. That rate affects almost all variable-rate borrowing.

The FOMC hiked general interest rates for the first time in three years at its previous meeting on Sep. 16 with a unanimous vote. But official Fed documents (especially the dot plot) revealed that FOMC members were deeply divided over what should come next.

There was no dot plot issued after the October meeting, but we’re expecting one in December.

"Sixteen of 19 officials expect another increase at either their October or December meeting," reported MarketWatch hours after the September meeting ended. "For next year, 10 officials signaled they see no more moves, but eight officials are penciling in another quarter-point increase."

Such small majorities within the FOMC suggest the number and timing of future rate hikes will likely be driven by key data: inflation and employment reports in the coming months. The Fed's dual mandates are to keep inflation around 2% (something it has failed to achieve over the last five years) and to maintain healthy employment levels.

Unfortunately, we think inflation will likely remain elevated well into 2027, even if the Iran war ends soon. We suspect the global oil market is in such bad shape that gas and diesel prices will take a long time to fall back to anything close to pre-war levels. More on that below.

In our view, last Friday’s better-than-expected jobs report likely increased the chances of a Fed rate hike next month, as did Tuesday’s worse-than-expected CPI. With employment levels looking good, it has little excuse not to focus on inflation, which is still way higher than its target.

“On Tuesday, two officials [FOMC members] who supported the decision to hold rates steady last month suggested the Fed might now need to pick up its pace,” wrote The Wall Street Journal on Nov. 10.

“Fed governor Christopher Waller, who spoke in London hours before the inflation data were released, said the Fed should consider a half-point increase next month if core prices rose around 0.3% in October from the previous month, which they did,” continued the Journal. “And after the report, Dallas Fed President Lorie Logan hinted that a faster pace of hikes might be warranted given the current inflationary pressures hitting the economy.”

Last night, the CME FedWatch tool put the chances of a 25-basis-point (0.25%) hike at the FOMC's next meeting on Dec. 19 at 90.8%, roughly matching Tuesday’s prediction. The remaining 9.1% expect a larger 50-basis-point (0.5%) increase.

It's worth noting that a Democratic Senate is unlikely to allow the president, who has repeatedly said he wants sharply lower interest rates, to pack the FOMC with those who share his view. U.S. Senators must agree to confirm many presidential appointments, including these.

The FOMC doesn't directly set new fixed-rate mortgage rates. But the factors that influence its decisions (and, to a lesser extent, the decisions themselves) certainly do move those rates, usually ahead of Fed rate-change announcements.

The war

“The Democrats’ midterm-election gains have raised questions about how the Trump administration will proceed on the Iran war — specifically whether it will restart large-scale strikes or focus on negotiations,” said The Wall Street Journal on Nov. 6.

However, a transcript of an interview with President Donald Trump on CBS News’s Sixty Minutes on Sunday evening says:

“Ross Douthat: So, you're not gonna escalate the war now that the midterms are over

“President Donald Trump: Well, I'm not looking to. I don't think there's any reason to. I don't think there's any reason to. Look--

“Ross Douthat: They still have nuclear material … —

“President Donald Trump: They have nothing. It's buried under thousands of tons of rock.”

The president followed up on Monday evening: “Look, Iran, I hope we're going to be able to make a deal with them,” Mr. Trump said during an impromptu news conference, says CBS. “But nothing's going to happen. And if we have to, we'll take very serious. We are so loaded.”

The president’s confirmation that Iran currently has no viable nuclear program and that he is unlikely to order new airstrikes should reassure markets and for now all but eliminate market trades based on war fears.

The war, oil prices, inflation and mortgage rates

The president’s remarks in that interview on Sunday may be behind oil prices falling on Monday, although those remain high by normal standards. Last night, the price of global benchmark Brent crude was $92.20 a barrel, up from Tuesday evening’s $91.49.

President Trump made it sound as if the war is virtually over, and he is waiting only to reach some sort of deal with Iran before withdrawing combat forces from the Middle East. And that completely changes how oil and other markets can view war risks.

We said earlier that we doubted that gas and diesel prices would return to pre-war levels for some months even if the war ends soon. Our reasons are:

1. Strategic reserves across the West are at multidecade lows — the lowest since 1982 for the U.S., according to the U.S. Energy Information Administration (EIA). Those need to be partly restored before pump prices can fully settle down.
2. Iran and its Houthi allies have damaged refineries across the Middle East, while Ukraine has similarly impaired many Russian refineries. Without these working at normal capacity, there is a global shortage of refined petroleum products, including gas, diesel and jet fuel.
3. As a result, The Financial Times wrote on Oct. 8, "Crude futures [what most people call oil prices] are no longer a reliable guide to the inflationary impact of fuel prices."
4. Until refinery capacity is restored, the “crack spread” will remain wide. That’s the difference between the price of crude oil and its refined products.

Of course, gas and diesel prices will likely fall considerably in response to an apparent virtual ending of the Iran war. However, we wouldn’t expect a return to pre-war levels until sometime in 2027.

And this means that, while inflation will likely moderate, it, too, might take some months to get back to pre-war levels. Unfortunately, that probably will result in somewhat elevated mortgage rates during that time.

Those rates are largely determined by a type of bond, the mortgage-backed security. And bond purchasers are wary of buying bonds when inflation is too warm because increasing prices eat into the value of the fixed incomes that bonds deliver.

Still, immediately before the Iran war started, average rates for a 30-year fixed-rate mortgage dipped just below 6%. And, since the president’s interview on Sunday, a return to those sorts of levels seems a much less distant prospect.

Fifth Third Bank's weekly preview

On Tuesday, Bill Adams, Fifth Third Commercial Bank's chief U.S. economist, published his weekly preview:

“Producer price inflation is forecast to pick up year over year on higher prices of diesel and other refined petroleum products. Prices of these products usually fall in October, so seasonal adjustment will add to their monthly increases. Transportation and warehousing service prices will likely be higher in the report, too.

“Existing home sales are forecast to fall to the weakest in more than two years in October as higher mortgage rates sidelined aspiring buyers. The median sale price of an existing home will likely rise faster year over year as moderately priced sales fall more than luxury sales—luxury homebuyers are less affected by mortgage rates. The listings-to-sales ratio, expressed as months of supply at October’s rate, is expected to reach the highest for this time of year in over a decade.”

Market expectations sometimes differ from the forecasts of Adams and his team because they're drawn from a wider pool of analysts.

Mortgage rates today

There are two economic reports on today's MarketWatch economic calendar. Neither of them typically moves mortgage rates far.

Here are market expectations for today’s reports:

• Initial jobless claims during the week ending Nov. 7 — Markets are expecting claims to have risen to 195,000 from the previous week’s 189,000
• October existing home sales — Markets are expecting annualized sales of 3.8 million homes, down from September’s 4.0 million

Mortgage rates typically rise on better-than-expected data and fall on worse-than-expected numbers.

What's next?

This week’s remaining possibly important report is the producer price index (PPI), due tomorrow. This is the CPI’s kid brother and measures price changes in the wholesale phase of the supply chain.