The average 30-year fixed rate mortgage was 6.62% yesterday, unchanged since the day before. The 15-year fixed mortgage rate stood at 5.78%, the same as one the day before. The 30-year FHA mortgage averaged 5.95% yesterday, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate was 6.76%, reflecting no change.
The bigger picture
Normally, we'd assume that the weekend's renewed airstrikes on Iran (and by Iran on ships and neighboring nations) would push mortgage rates today higher. But, given those rates' limp reaction to last week's military escalation, we're far from sure such an assumption would be correct.
As we said last Friday, we and many others are surprised by how markets have been reacting (or failing to react) to the conflict recently. You might expect a fairly cavalier attitude from stock markets, but bond markets (one of which determines mortgage rates) tend to be much more sober and hyper-realistic.
Today's only economic report is the monthly U.S. Treasury balance for June: the "national credit card statement." Typically, markets shrug that off. But they just might pay more attention today, especially if it reveals higher-than-expected government spending on the Middle East conflict. Generally, rising government borrowing means more expensive consumer debt, including higher 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 | 6.62% | 6.66% | +0% | +0.08% |
| 15-Year Fixed | 5.78% | 5.84% | +0% | +0.06% |
| 30-Year Fixed FHA | 5.95% | 7.17% | +0% | +0.03% |
| 30-Year Fixed VA | 6.07% | 6.23% | +0% | +-0% |
| 30-Year Fixed USDA | 5.99% | 6.15% | +0% | -0.01% |
| 30-Year Fixed Jumbo | 6.76% | 6.77% | +0% | +0.08% |
| 5/6 Year ARM | 6.09% | 6.17% | +0% | -0.01% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.66% | 6.69% | +0% | +0.06% |
| 15-Year Fixed | 5.74% | 5.8% | +0% | +0.05% |
| 30-Year Fixed FHA | 5.94% | 7.15% | +0% | +0.02% |
| 30-Year Fixed VA | 6.06% | 6.15% | +0% | -0.01% |
| 5/6 Year ARM | 6.18% | 6.25% | +0% | +0.01% |
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
May's price indices (the CPI, PPI, IPI and PCE) tend to lend weight to pessimistic arguments about future inflation rates. And those reports landed either side of the last meeting of the Federal Reserve's rate-setting committee on Jun. 16-17.
The minutes of that meeting were released on July 7, and Barron's reported that day:
"The minutes from Kevin Warsh’s [the new Fed chair's] first Federal Reserve policy meeting contained few surprises, but underscored how divided policymakers remained over the path of interest rates. That could be a sign the Fed will stay on hold for longer."
"Nine policymakers penciled in at least one rate hike by the end of the year, according to the Summary of Economic Projections released in June, continued Barron's. "Eight officials expected no changes to the benchmark rate, while only one official believed the committee would implement a rate cut by the end of the year. Warsh declined to provide projections."
The minutes themselves revealed: "Most participants remarked on scenarios in which inflationary pressures would dissipate and inflation would soon begin to return to 2 percent. In such scenarios, almost all of these participants noted that it would likely be appropriate to maintain or eventually lower the target range for the federal funds rate. Most participants, however, also pointed to scenarios in which, in the context of stable labor market conditions, inflation would remain elevated due to strong AI-related demand, the conflict in the Middle East, or the effects of tariffs. In such scenarios, almost all of these participants indicated that some policy
firming would likely be warranted to return inflation to 2 percent."
In this context, "policy firming" very likely means one or more hikes to general interest rates this year.
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.
Bond markets vs. 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."
Mortgage rates today
There is only one economic report on today's MarketWatch economic calendar. That's the monthly U.S. Treasury balance for June.
As we suggested above, markets may pay more attention to today's report than they usually do.
What's next?
Strap in for tomorrow's consumer price index (CPI) for June. After that, we're due June retail sales data on Thursday and a preliminary reading of July's consumer sentiment index on Friday.
Events in the Middle East over the last few days might push mortgage rates appreciably higher if the renewed conflict is not swiftly resolved. That's 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 (and many other) prices.
Meanwhile, last week's ban on diesel exports by Russia might also increase prices for that fuel, which is essential for the land-based transport of goods and raw materials around the world, driving up the inflation rate. Mortgage rates are highly sensitive to warming inflation.
