What moved rates this week
Zillow's readout to U.S. News shows the 30-year purchase rate at 7.155% today, up from 7.104% on Friday. For homeowners looking to refinance, the 30-year rate is 7.247%, and the 15-year fixed is 6.318%.
The quick move higher ties back to the bond market that drives mortgage pricing. Treasury outlined a buyback program meant to cool yields and borrowing costs, but investors had been bracing for a bigger effort than the one unveiled last week, which nudged yields and mortgage rates up.
How geopolitics and oil feed into borrowing costs
Home loan rates have been climbing since late February, when the U.S. war in Iran began. When the conflict heats up, mortgage rates often drift higher alongside the 10-year Treasury, their main benchmark; when it appears closer to resolution, both tend to ease.
This is a price-sensitive part of the market, and the broader Middle East turmoil is pushing crude higher. Last week, oil reached $100 per barrel, a level not seen since July, as tensions intensified. Pricier energy raises production and shipping costs, stokes inflation, and, in turn, keeps interest rates elevated.
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Inflation, the Fed, and what's next
August's CPI clocked inflation at 3.4% year over year, largely propped up by expensive energy as the war in Iran lifts oil costs. After that report, CME's FedWatch Tool pegged the odds of a rate hike at the September meeting at 86%.
Fed officials kept rates unchanged in July, as expected, but three policymakers favored a quarter-point increase, contrasting with June's unanimous hold. With inflation still above the Fed's 2% goal, the odds point to the central bank moving rates higher in the months ahead. The Fed doesn't set mortgage rates directly, but its policy path shapes the trend. And given today's backdrop, the housing market is likely to run into headwinds through the rest of the summer.
What this means for your money
"Right now, regardless of how the Fed parses this potentially pivotal CPI read, all three consumer signals are pointing in the wrong direction: August gas prices are part of why headline inflation remains so high and well above core; elevated prices hurt household savings; and mortgage rates again hit 2026 highs yesterday - a trend that looks poised to continue."
- The remarks came from Jake Krimmel, a senior economist with Realtor.com, the real estate listings marketplace.
Most forecasters see mortgage rates staying relatively high for a while, with 30-year fixed loans stuck north of 6%. A surprise could always yank them down, but it's seen as unlikely that rates will drop under 3% or even 4% anytime soon. Bottom line for household budgets: borrowing remains expensive, so timing and affordability matter more than ever if you're weighing a home purchase or refinance.
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