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Tuesday, August 11
Personal Finance

Mortgage Rates Today, Tuesday, August 11: Kind of a Big Jump

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If you’re in search of lower mortgage interest rates, unfortunately today is not the day for you.

The average interest rate on a 30-year, fixed-rate mortgage has risen to 6.69% APR, as reported by Zillow to BW. This is an increase of 11 basis points from yesterday, but a decrease of one basis point from a week ago. (Refer to the chart below for more details.) A basis point is equal to one one-hundredth of a percentage point.

It’s important to note that mortgage rates are constantly fluctuating, and if you’re monitoring rates daily, you’ll notice a lot of volatility. Currently, mortgage rates are being influenced by a battle between persistent inflation and a weakening job market. Read on below the chart to learn more about how these conflicting factors are affecting rates.

Average mortgage rates, last 30 days

📈 What influences mortgage rates?

Mortgage rates are constantly changing, as they are heavily influenced by reactions to new inflation reports, job numbers, Fed meetings, global news, and more. Even small changes in the bond market can impact mortgage pricing.

Last week focused on job data, while this week is centered on inflation, which are the two components of the Federal Reserve’s dual mandate. The Fed aims to maintain maximum employment and a target 2% inflation rate to stabilize the U.S. economy.

Let’s review the latest employment data before delving into this week’s upcoming events. The jobs report from Friday was in line with the disappointing private sector data from the ADP Employment Report released last Wednesday, showing job losses.

Predictions for the July Employment Situation Summary estimated an addition of 83,000 jobs with steady unemployment rates. However, the U.S. actually lost 23,000 jobs in July. Additionally, job numbers for May and June were revised downwards, reducing the total job additions in those months from 186,000 to 83,000.

BW senior economist Elizabeth Renter notes, “The data poses challenges for the Fed in determining the biggest risks: inflation or the labor market.”

This week, the focus shifts to inflation as the Bureau of Labor Statistics is set to release the July Consumer Price Index tomorrow. Forecasts suggest slight improvements from June, but as seen with the jobs report, expectations can be misleading.

Although the Federal Reserve does not directly control mortgage rates, its actions can indirectly influence them through the federal funds rate. Changes in the federal funds rate have widespread effects on the economy, prompting mortgage lenders to adjust rates in anticipation of Fed decisions.

If the CPI data released indicates increased inflation, any downward trend in mortgage rates from last week’s job data may be limited. However, if inflation shows signs of easing, mortgage rates could soften.

If today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate, refinancing may be a viable option (especially if you plan to stay in your home long enough to recoup closing costs).

Given the current rates, consider refinancing if your existing rate is around 7.19% or higher.

When considering refinancing, think about your objectives: Do you want to reduce your monthly payment, shorten your loan term, or access home equity? Your preferences may influence the type of refinance that suits you best.

Use BW’s refinance calculator to estimate potential savings and determine the break-even point for refinancing costs.

🏡 Should I start shopping for a home?

The ideal time to start shopping for a home varies for each individual, depending on whether you can comfortably afford a mortgage at current rates.

If you can afford a mortgage now, don’t worry too much about potential future rate drops; you can always refinance later. Focus on getting preapproved, comparing lender offers, and determining a monthly payment that fits your budget.

Estimate your potential monthly payment using BW’s affordability calculator. If buying a new home isn’t feasible at the moment, take steps to improve your financial profile by paying off debts and saving for a down payment. This not only enhances your cash flow for future mortgage payments but also boosts your chances of securing a better interest rate when you’re ready to purchase a home.

🔒 Is it wise to lock in my rate?

If you have received a quote that you are satisfied with, it may be beneficial to lock in your mortgage rate, especially if your lender offers a float-down option. A float-down allows you to take advantage of a lower rate if the market decreases during your lock period.

Rate locks provide protection against rate increases while your loan is being processed, and given the unpredictable nature of the market, this peace of mind can be valuable.

🤓 Nerdy Reminder: Rates can fluctuate daily, and even hourly. If you are satisfied with the terms of your current deal, it is advisable to secure it.

🧐 Why is the rate I saw online different from the quote I received?

The rate displayed online is a sample rate — typically for a borrower with excellent credit, making a substantial down payment, and opting to pay for mortgage points. given sentence: “The cat chased the mouse around the house.”

Rewritten sentence: “Around the house, the mouse was chased by the cat.”

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