The average 30-year fixed rate mortgage was 6.73% yesterday, a decrease of 0.01% since the day before. The 15-year fixed mortgage rate stood at 5.89%, the same as one the day before. The 30-year FHA mortgage averaged 6.11% yesterday, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate was 6.88%, reflecting an increase of 0.02%.
The bigger picture
Mortgage rates barely budged yesterday, as Thursday's crucial inflation report came in almost entirely in line with market expectations.
However, "Freddie Mac reported that the 30-year fixed mortgage rate rose to 6.66% this week, marking its highest level in a year," said The Wall Street Journal. Freddie deals in weekly averages for 30-year fixed-rate mortgages, and those are often different from daily averages.
The consumer sentiment index certainly can move mortgage rates, but we'll be mildly surprised if today's does.
Scroll on down to see more 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 | 6.73% | 6.77% | -0.01% | +0.24% |
| 15-Year Fixed | 5.89% | 5.95% | +0% | +0.21% |
| 30-Year Fixed FHA | 6.11% | 7.31% | +-0% | +0.29% |
| 30-Year Fixed VA | 6.16% | 6.33% | -0.02% | +0.2% |
| 30-Year Fixed USDA | 6.1% | 6.27% | -0.05% | +0.17% |
| 30-Year Fixed Jumbo | 6.88% | 6.9% | +0.02% | +0.38% |
| 5/6 Year ARM | 6.23% | 6.31% | +0% | +0.12% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.76% | 6.8% | -0.01% | +0.23% |
| 15-Year Fixed | 5.85% | 5.91% | +-0% | +0.21% |
| 30-Year Fixed FHA | 6.09% | 7.3% | +0% | +0.27% |
| 30-Year Fixed VA | 6.18% | 6.27% | -0.01% | +0.21% |
| 5/6 Year ARM | 6.12% | 6.17% | -0.08% | +0.04% |
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.
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."
Mortgage rates today
There are three economic reports on today's MarketWatch economic calendar. They are:
- July consumer sentiment survey — Markets expect sentiment to have improved to 54 from 49.5 previously
- July Chicago business barometer — Markets expect the barometer reading to have fallen to 55.7 from 56.7 in June
- Q2 employment cost index — Markets expect the index to have fallen to 0.8% during the second quarter, compared with the first quarter's 0.9%
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.
It's worth noting that some traders tidy up their portfolios at the end of each month, and that sometimes leads to volatility, the cause of which isn't immediately obvious.
What's next?
Next week's schedule includes four purchasing managers' indices and four employment reports. But the week's most important report by far is next Friday's jobs report for July.
Air strikes in the Middle East over the last couple of weeks have pushed mortgage rates appreciably higher, and they may continue upward if the conflict's re-escalation continues for long.
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 hasn't translated into appreciably lower gas and diesel prices because a lack of refining capacity exacerbates rather than moderates supply issues, while demand remains fairly steady.
