The average 30-year fixed rate mortgage was 6.47% yesterday, an increase of 0.01% since the day before. The 15-year fixed mortgage rate stood at 5.46%, up by 0.02%. The 30-year FHA mortgage averaged 5.79% yesterday, having risen by 0.04. Meanwhile, the 30-year jumbo mortgage rate was 6.69%, reflecting an increase of 0.01%.
The bigger picture
Mortgage rates nudged modestly higher yesterday. That was the best we could hope for following a warmer-than-expected producer price index (PPI) that morning.
The PPI confirmed something many economists and Wall Street have been fearing for some months. Namely, that tariffs will soon be pushing consumer prices higher.
In other words, we're almost certainly in for another bout of inflation. "Wholesale prices—the cost of goods and services purchased directly from producers—rose at the sharpest monthly rate in three years, raising fresh alarm that tariffs are taking root in the economy and pushing up inflation," said The Wall Street Journal.
That changed the chances of the Federal Reserve cutting its federal funds rate (which determines most other rates, but not directly mortgage rates) when it next meets on September 17. Yesterday, we reported, "The CME FedWatch tool puts the chances of a quarter-point cut that day at 93.8%. A further 6.2% back a larger, half-point cut. And that leaves zero chance of rates staying the same."
Twenty-four hours later, those chances have changed to 92.1% for a quarter-point cut and 7.9% for rates staying put that day. Now, following the PPI, investors are saying there's zero chance of a half-point reduction.
Today's key reports: Retail sales and consumer sentiment
Earlier this year, the National Conference of State Legislatures quoted economist Christopher Thornberg, the founding partner of Beacon Economics: "Ultimately, the U.S. is a consumer-driven economy, and consumer spending is almost 70% of GDP, so if the consumer is healthy in their spending, it pulls the rest of the economy forward," Thornberg said. "Regardless of what’s happening in real estate, regardless of what’s happening in manufacturing, regardless of what’s happening in our banking sector, they are the true driving force."
Retail sales are an important component of overall consumer expenditures. So, with so much at stake, investors tend to take notice of these monthly figures, the latest of which (for July) are due at 8:30 a.m. Eastern.
For the same reason, they sometimes pay attention to the consumer sentiment index, which is scheduled for release 90 minutes later. This is a preliminary reading of sentiment in August, which means it may be revised later. Other reports today tend to appear on general investors' radar only occasionally.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.47% | 6.5% | +0.01% | -0.28% |
| 15-Year Fixed | 5.46% | 5.51% | +0.02% | -0.27% |
| 30-Year Fixed FHA | 5.79% | 7% | +0.04% | -0.26% |
| 30-Year Fixed VA | 5.87% | 6.01% | +0.03% | -0.26% |
| 30-Year Fixed USDA | 5.76% | 5.9% | +0.04% | -0.35% |
| 30-Year Fixed Jumbo | 6.69% | 6.71% | +0.01% | -0.28% |
| 5/6 Year ARM | 6.54% | 6.57% | +-0% | -0.28% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.55% | 6.58% | +-0% | -0.28% |
| 15-Year Fixed | 5.46% | 5.5% | +0.02% | -0.27% |
| 30-Year Fixed FHA | 5.76% | 6.97% | +0.03% | -0.26% |
| 30-Year Fixed VA | 5.89% | 6.03% | +0.03% | -0.28% |
| 5/6 Year ARM | 6.54% | 6.56% | -0.06% | -0.39% |
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 tariffs and deficit funding are especially influential at the moment.
Here's the Comerica Bank economics team's take on what to expect from today's main economic reports:
"Retail sales likely rose solidly on higher vehicle sales and nonstore retail sales (primarily e-commerce). ... The University of Michigan’s survey of households will probably show new tariffs weighed on consumer sentiment again in August. The survey will likely show another increase in inflation expectations, particularly for the near-term (year-ahead period)."
Mortgage rates today
Today's MarketWatch economic calendar contains several reports. However, only two — retail sales and consumer sentiment — typically affect mortgage rates.
For the sake of completeness, we'll list all today's reports along with what markets are expecting from them and how they performed in the previous reporting period:
- July retail sales — Markets expecting a 0.5% increase, down from June's 0.6%
- Retail sales minus autos in July — Markets expecting a 0.3% increase, down from June's 0.5%
- August Empire State manufacturing survey — Markets expecting 1.8, sharply down from July's 5.5
- July import price index — Markets expecting 0.0%, slightly down from June's 0.1%
- July industrial production — Markets expecting 0.0%, down from June's 0.3%
- July capacity utilization — Markets expecting 77.6%, unchanged since June
- June business inventories — Markets expecting 0.2%, up from May's 0.0%
- July consumer sentiment (prelim. ) — Markets expecting 62.5%, up from June's 61.7%
Generally speaking, mortgage rates move downward on worse-than-expected economic news and upward when the data is better than expected.
Next week is a relatively quiet one for economic reports. The most exciting event may be the release of the minutes of the last meeting of the Federal Reserve's rate-setting committee, due Wednesday.
