Mortgage Rates Today, July 28, 2026: Calmer Middle East Leaves Domestic Economy in the Spotlight

The bigger picture

The Middle East remains a potential catalyst for higher mortgage rates if fighting resumes. But, for now, both sides seem content to pause the conflict.

Scroll on down to see how today's economic reports might affect mortgage rates.

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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) is due to conclude a two-day meeting tomorrow. It's an opportunity for the FOMC to hold general interest rates steady or to increase them.

A week ago, the CME FedWatch tool put the chances of the committee hiking general rates at just 16.0%. By last night, the chances had risen to 36.3%, though they were unchanged since Sunday night. That's not good for mortgage rates and likely reflects rises over most of last week.

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.

The Fed's last meeting

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 FOMC 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.

Read Could the Fed Really Raise Interest Rates Next Week? for reasons long delays in reaching a peace settlement with Iran could drive oil prices, inflation and mortgage rates much higher.

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 weekly preview

On Monday, Comerica Bank published its weekly preview:

"The Federal Open Market Committee is expected to hold the federal funds target range steady at 3.50% to 3.75% at this week’s decision. This would mark the fifth consecutive meeting with no change since the Fed last cut in December 2025. Financial markets will likely focus on the Committee’s assessment of core inflation, since the Fed ended forward guidance after Kevin Warsh became Chair. The policy statement will likely lay out another mixed picture of inflation’s drivers. On the one hand, good news from relatively tame house prices and rent increases, and from the dissipating impact of 2025’s tariff hikes. On the other, bad news from rebounding energy prices as disruptions to Mideast and Russian exports resurface; new tariffs; AI-related pressure on electronics prices; and labor supply bottlenecks pushing up prices of services like home health care and nursing care. If the Committee or Chair Warsh offer even an inkling of guidance, they likely will indicate that the decision between holding rates steady or hiking in September will be data dependent.

"Real GDP [aka gross domestic product] growth is forecast to pick up in the advance (first) estimate for the second quarter of 2026, supported by strong nonresidential fixed investment—reflecting the AI boom—and resilient consumer spending. The trade deficit likely widened, weighing on growth. The Fed’s preferred measure of inflation likely slowed in June on lower energy prices and cooler core inflation. Don’t expect markets to take much comfort from these data; July’s rebound in energy prices will deliver another setback to the next batch of inflation reports."

Comerica Bank's previews don't always match up with market expectations, which are based on the consensus forecasts of a wider pool of analysts.

Mortgage rates today

Although there are five economic reports on today's MarketWatch economic calendar, only one is important enough to warrant a market expectation being published. The others are unlikely to affect mortgage rates.

Markets expect the consumer confidence index from the Conference Board to improve a little, rising to 92 in July from 91.2 in June.

Typically, mortgage rates fall when economic data disappoint market expectations and rise when figures exceed those expectations.

What's next?

Tomorrow's announcement by the Fed of whether it will be hiking general interest rates that afternoon could move mortgage rates. Whether or not it does will depend on what it says, something that's hard to predict since the Fed recently stopped providing forward guidance to markets. A hike might push mortgage rates higher.

Besides the Fed announcement, events on Thursday are most likely to affect mortgage rates this week. The most important of those is likely to be that morning's inflation report, but the GDP estimate, due at the same time, might also prove influential.

Events in the Middle East over the last couple of weeks have pushed mortgage rates appreciably higher, and they may continue upward if the conflict resumes.

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, 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. And many oil refineries in the Middle East and Russia are out of commission following war damage, sending oil prices lower. Why buy oil when you can't refine it?

Unfortunately, that doesn't translate into lower gas and diesel prices because a lack of refining capacity exacerbates rather than moderates supply issues, while demand remains fairly steady.