The average 30-year fixed rate mortgage was 6.43% yesterday, unchanged since the day before. The 15-year fixed mortgage rate stood at 5.4%, the same as one the day before. The 30-year FHA mortgage averaged 5.79% yesterday, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate was 6.63%, reflecting no change.
The bigger picture
August was kind to mortgage rates. Those for a 30-year fixed-rate mortgage averaged 6.609% on the first of the month but 6.430% on the last business day, according to ICanBuy, our favorite gauge. Mortgage News Daily's readings were pretty similar, falling to 6.50% at the end of August from 6.63% at the beginning.
That's about as good as we could have hoped for. It's unlikely that mortgage rates will do more than drift gently for now, absent some seriously significant driver.
Opportunities and threats to lower mortgage rates
Such drivers could include a sudden spike in unemployment (data due Friday), leading to a shock recession (those rates tumble), or a fresh mountain of inflation (mortgage rates rise). Neither of those is impossible or even highly unlikely.
On Sunday, Dr. Torsten Sløk, Apollo's chief economist, wrote: "There is upside pressure on inflation and inflation expectations from tariffs, dollar depreciation and growing disagreement on the FOMC [the Federal Reserve's rate-setting body] about how much weight to put on rising inflation relative to slowing employment. The risks are rising that we could see another 'inflation mountain' emerge over the coming months." His headline was, "Will We See a Repeat of 2021 and the 1970s?" referring to the damaging bouts of inflation during that year and decade.
Fed independence threat
Another risk to low mortgage rates is posed by perceived threats to the independence of the Federal Reserve.
"The Fed wields extensive power over the U.S. economy," said Fortune magazine, also on Sunday. "By cutting the short-term interest rate it controls — which it typically does when the economy falters — the Fed can make borrowing cheaper and encourage more spending, growth, and hiring. When it raises the rate to combat the higher prices that come with inflation, it can weaken the economy and cause job losses.
"Most economists have long preferred independent central banks because they can take unpopular steps that elected officials are more likely to avoid. Economic research has shown that nations with independent central banks typically have lower inflation over time."
So far, markets have shrugged off politicians' attempts to influence the Fed or undermine its independence. But economists and business media warn the danger hasn't gone away. On Monday morning, The Financial Times carried a headline, "Investors underestimate ... threat to the Federal Reserve economists warn." It says its latest survey of economists shows political interference "has caused long-term damage to the US central bank and economy."
Yet again on Sunday, Barron's quoted a range of financial-sector CEOs who have recently spoken out about the unique importance of the Fed retaining its independence. Those included:
- Citadel’s Ken Griffin: " ... ultimately the independence of the Fed is of the utmost importance to the American and global economy."
- JPMorgan Chase CEO Jamie Dimon "used his bank’s latest earnings call to declare that Fed independence is 'absolutely critical.'"
- Citigroup CEO Jane Fraser said in a July statement that the Fed’s credibility “is critical to the effectiveness of our capital markets and U.S. competitiveness.”
- Goldman Sachs chief David Solomon "called central-bank independence 'super important' and said on CNBC in July that it was something 'we should fight to preserve.'"
- Bank of America’s Brian Moynihan told Bloomberg that the Fed was ... “set up to be independent.”
Slashing general interest rates through subverting the Fed would probably cause a brief fall in mortgage rates. But very soon after, many fear, they would likely rise back up well beyond their current level.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.43% | 6.47% | +0% | -0.18% |
| 15-Year Fixed | 5.4% | 5.45% | +0% | -0.22% |
| 30-Year Fixed FHA | 5.79% | 7% | +0% | -0.15% |
| 30-Year Fixed VA | 5.87% | 6.02% | +0% | -0.14% |
| 30-Year Fixed USDA | 5.76% | 5.91% | +0% | -0.22% |
| 30-Year Fixed Jumbo | 6.63% | 6.65% | +0% | -0.28% |
| 5/6 Year ARM | 6.47% | 6.5% | +0% | -0.24% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.51% | 6.54% | +0% | -0.18% |
| 15-Year Fixed | 5.38% | 5.43% | +0% | -0.23% |
| 30-Year Fixed FHA | 5.76% | 6.96% | +0% | -0.16% |
| 30-Year Fixed VA | 5.9% | 6.04% | +0% | -0.16% |
| 5/6 Year ARM | 6.51% | 6.53% | +0% | -0.27% |
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 tariffs, Fed independence and deficit funding are especially influential at the moment.
Mortgage rates today
Today's MarketWatch economic calendar shows three economic reports due. Two are purchasing managers' indices (PMIs) for the manufacturing sector. These measure the activity in organizations' procurement departments. Typically, the PMI from the Institute for Supply Management (ISM) is more influential than the one from S&P Global.
Here are today's reports, alongside market expectations for today's figures and the same data from the previous reporting period:
- August S&P manufacturing PMI — Markets expect 53.3, unchanged from previously
- August ISM manufacturing PMI — Markets expect 48.5%, slightly better than the previous 48.0%
- July construction spending — Markets expect 0.0% growth, better than June's -0.4% contraction
Today's reports rarely affect mortgage rates unless they contain shockingly good or bad data. Better-than-expected numbers tend to push mortgage rates higher, while worse-than-expected ones usually drag them lower.
Strap in for Friday's jobs report. That's often the most influential of all monthly reports, though inflation data currently rival it.
