Mortgage rates decreased slightly today, benefiting from the release of the July Consumer Price Index yesterday. The report indicated a slight decrease in inflation, which relieved some pressure on mortgage rates.
The average interest rate on a 30-year fixed-rate mortgage dropped to 6.56% APR, as reported by Zillow to BW. This is three basis points lower than yesterday, but nine basis points higher than a week ago. (Refer to the chart below for more details.) A basis point is equivalent to one one-hundredth of a percentage point.
Currently, mortgage rates are being influenced by the conflicting factors of inflation and a weakening job market. Read on below the chart to understand how these factors are impacting rates.
Average mortgage rates, last 30 days
📈 What influences mortgage rates?
Last week focused on job data, while this week is centered around inflation, both of which are key components of the Federal Reserve’s dual mandate. The Fed aims to maintain maximum employment and a 2% target rate of inflation to stabilize the U.S. economy.
Predictions for the July Employment Situation Summary estimated an addition of 83,000 jobs with unchanged unemployment rates. However, the actual data revealed a loss of 23,000 jobs in July. Furthermore, revisions to May and June job numbers were downward, reducing the total job additions to 83,000.
“The data presents challenges for the Fed in determining the primary risks between inflation and the labor market,” stated BW senior economist Elizabeth Renter.
The latest CPI data could alleviate some pressure on mortgage rates, as inflation remains higher than desired by the Fed. However, since the numbers aligned with expectations and showed a slight easing of annual inflation compared to June, rates are unlikely to spike solely based on this report.
Consider refinancing if today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate (and if you intend to stay in your home long enough to recoup closing costs).
With current rates, refinancing may be beneficial if your existing rate is around 7.06% or higher.
🏡 Should I start shopping for a home?
The timing to start home shopping is subjective; the key factor is whether you can comfortably afford a mortgage at today’s rates.
🔒 Should I lock my rate?
The cat is sleeping soundly on the couch.
The cat is peacefully snoozing on the sofa.