Weekly Mortgage Rates Rise, Halting Two-Week Slide
People hoping to refinance may have to wait.
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Mortgage rates didn't move much in the week ending Aug. 21. That's disappointing for homeowners who wish to refinance their mortgages.
The average rate on a 30-year fixed-rate mortgage rose two basis points to 6.68%, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.
Markets deal with conflicting signals
This slight increase is a bummer because it arrested a downhill slide. The 30-year mortgage rate had fallen for the previous two weeks and is noticeably lower than just a few months ago, after lingering at around 7% from April through June.
Since the Trump tariffs were announced in April, financial markets have tried to assess their effects on inflation and employment. It turns out that both economic indicators are getting worse. The core consumer price index rose from 2.9% in June to 3% in July, while the unemployment rate rose from 4.1% to 4.2%. Job growth slowed way down, with nonfarm payrolls increasing a total of just 106,000 jobs from May through July, compared to 380,000 in the three months before that.
It's unusual for inflation and unemployment to go up at the same time, and the phenomenon puts the Federal Reserve in a bind. Should it leave short-term interest rates alone to curb inflation, or cut them to encourage job growth?
Just a week ago, investors felt confident that the Fed would focus on employment and reduce short-term rates when it meets next month. But they're less certain now — and that uncertainty might have driven this week's slight increase in mortgage rates.
Too soon for most people to refinance
Have rates fallen enough to justify refinancing? That's the question on the lips of many people who bought homes in the last couple of years. For most of them, the answer is probably no, not yet.
If 30-year mortgage rates fell to 6%, then plenty of people would be "in the money" to refinance their home loans. Why? Because they would be able to reduce their mortgage rate by at least three-quarters of a percentage point. This would benefit people who bought their homes between mid-2023 and mid-2024, when rates spent most weeks above 6.75%.
Buyers focus on affordability
Typically, home sales are strongest from May through August. But this year’s combination of high home prices and elevated mortgage rates has frustrated home buyers and limited sales.
"Affordability is the primary constraint," said Lisa Sturtevant, chief economist for Bright MLS, in a statement. "Mortgage rates have been in the high 6% range and the median home price hit a new record high this summer. There are simply fewer would-be buyers out there who can afford to buy in this market."
The median existing home was sold for $422,400 in July, according to the National Association of Realtors. That's a 0.2% increase from a year earlier — and a 38.2% increase from five years earlier, when the median home was sold for $305,600.