The average 30-year fixed rate mortgage was 6.78% yesterday, unchanged since the day before. The 15-year fixed mortgage rate stood at 5.93%, the same as one the day before. The 30-year FHA mortgage averaged 6.13% yesterday, having dropped by 0.01. Meanwhile, the 30-year jumbo mortgage rate was 6.9%, reflecting no change.
The bigger picture
Asked about Middle East peace talks yesterday, President Donald Trump responded, "You’ll find out today or tomorrow. They’re going to go quickly one way or the other. It’s not very complex," quoted by The Guardian.
That explains why mortgage rates held close to steady yesterday. Markets are desperate for some certainty, but that's been in short supply since the Iran conflict began at the end of February.Scroll on down to see about today's economic reports and how they might affect mortgage rates.
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Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.78% | 6.82% | +0% | +0.24% |
| 15-Year Fixed | 5.93% | 5.99% | +-0% | +0.21% |
| 30-Year Fixed FHA | 6.13% | 7.34% | -0.01% | +0.24% |
| 30-Year Fixed VA | 6.22% | 6.38% | -0.01% | +0.2% |
| 30-Year Fixed USDA | 6.17% | 6.33% | +-0% | +0.24% |
| 30-Year Fixed Jumbo | 6.9% | 6.92% | +-0% | +0.29% |
| 5/6 Year ARM | 6.31% | 6.38% | -0.64% | +0.18% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.83% | 6.87% | +0% | +0.24% |
| 15-Year Fixed | 5.9% | 5.95% | +0.01% | +0.23% |
| 30-Year Fixed FHA | 6.12% | 7.32% | -0.02% | +0.22% |
| 30-Year Fixed VA | 6.22% | 6.31% | -0.01% | +0.2% |
| 5/6 Year ARM | 7.02% | 7.08% | +0.89% | +0.91% |
What's coming up?
Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning the war, employment, inflation, tariffs, and deficit funding are especially influential at the moment.
The Fed
The Federal Reserve's rate-setting body (the Federal Open Market Committee or FOMC) left general interest rates unchanged on Jul. 29, as many expected. However, most now think a hike is likely at the next FOMC meeting on Sep. 16, according to the CME FedWatch tool.
Assuming that the war in Iran doesn't end quickly, we think such a hike is a sensible expectation. A prolonged conflict is likely to fuel inflation, and the Fed has a duty to maintain that at 2% annually, a goal reaffirmed by Kevin Warsh, the new Fed Chair, on Jul. 29. The main tool the Fed uses to rein in inflation is rate hikes.
The Fed 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.
Why bond markets act differently from stock markets
Mortgage rates are largely dictated by the yields on a type of bond, the mortgage-backed security (MBS). So, we focus on bond markets.
On May 7, The New York Times explored why stock markets and bond markets have been behaving so differently from each other since the start of the conflict in the Middle East.
Investors in stocks have been wagering that U.S. companies will continue to generate large profits during the conflict. And the stock market typically cares only about whether dividends and company values will continue to rise.
"But the bond market is another matter," said The Times. "Bond traders have maintained a much sharper focus on risk. Yields remain correlated with shifts in the price of oil. As oil prices have spiked and inflation has risen, yields have risen and bond prices, which move in the opposite direction, have fallen."
Comerica Bank's outlook for this week
On Monday, Comerica Bank published its weekly outlook:
"Employers likely added jobs at a moderate pace in July, holding the unemployment rate steady. The labor force participation rate is forecast to edge up from June’s post-pandemic low. Even so, the household survey will likely show that the labor force continues to lag hiring, a trend that will push down the unemployment rate if sustained. Unemployment among recent grads without work experience will likely be lower than at this time last year. Average hourly earnings growth likely held steady. Also out this week, job openings likely rose in the stale May release, while hires and quits are expected to be little changed.
"The Institute for Supply Management’s Purchasing Managers Indexes (ISM PMIs) are forecast to show moderate manufacturing growth and brisk services growth in July. Input price inflation is forecast to run hot again in the surveys, and businesses in both sectors will likely report jobs added in the month. Non-farm productivity likely picked up in the second quarter as private output growth outpaced hours worked. Unit labor costs likely rose at a similar pace to the first quarter’s."
Comerica's forecasts are sometimes different from published market expectations, which are drawn from a broader pool of analysts' consensus forecasts.
Mortgage rates today
There are again three economic reports on today's MarketWatch economic calendar. None of them typically affects mortgage rates much.
If any does, it may be June's job openings and labor turnover survey (JOLTS), which provides useful insights into the employment market but delivers them when they're already stale.
Here are market expectations for today's three reports
- June trade balance — The trade deficit is expected to have widened more slowly in June, by $72.9 billion, compared with May's $77.6 billion
- June JOLTS — Markets expect the number of job openings in June to have fallen to 7.4 million from 7.6 million in May
- June factory orders — Markets expect factory orders to have increased 0.3% in June, having shrunk by 1.3% in May
Typically, mortgage rates rise when such figures are better than expected and fall when they're worse. On-forecast figures often leave those rates unchanged.
What's next?
We're due two PMIs for the services sector tomorrow. But this week is mostly about employment data, starting with today's job openings and labor turnover survey (JOLTS) for June.
By far the most important economic report this week (and often in any given month) is the jobs report, formally known as the employment situation report. July's is due on Friday morning.
Tomorrow's ADP national employment report is sometimes seen as a bellwether for Friday's jobs report. So, it may influence mortgage rates.
Air strikes in the Middle East over the last couple of weeks or so have pushed mortgage rates appreciably higher, and they may continue upward if the conflict's re-escalation continues for long. But there's now hope for an early settlement.
Mortgage rates respond to war news because a prolonged closure of the Strait of Hormuz could again choke off 20% of the world's oil supply, putting additional pressure on gas, diesel and many other prices.
Strategic petroleum reserves in the U.S. and globally are now at multi-decade lows, meaning there's less room to cushion consumers from rising gas prices. It may not feel like it, but this method of suppressing pump prices has been in place since the start of the conflict.
Trading Economics says, "US Strategic Petroleum Reserve crude inventories fell to 307.650 million [barrels, presumably] for the week ending July 24, marking the lowest level since 1983."
Meanwhile, many oil refineries in the Middle East and Russia are out of commission due to damage from the wars involving Iran and Ukraine, sending oil prices lower. Why buy oil when you can't refine it?
Unfortunately, that hasn't so far translated into appreciably lower gas and diesel prices because a lack of refining capacity exacerbates rather than moderates supply issues for consumers and businesses, while demand remains fairly steady.
