Rates on the conforming 30-year fixed mortgage increased 3 basis points this past week and are now higher on a year-over-year basis, as inflation remains front and center in the minds of investors.
The latest rates have moved closer to their July 2025 level at over 6.7%, although still below the 7% peak they briefly topped in February that year, Freddie Mac reported.
The 30-year FRM averaged 6.69% for Aug. 6, up from last week when it was at 6.66%, the Freddie Mac Primary Mortgage Market Survey found. For this same week last year, the 30-year was 6.63%.
Meanwhile, the 15-year FRM moved lower, to 6.01%, compared with last week's 6.04%. A year ago, the 15-year FRM averaged 5.75%.
"While mortgage rates continue to influence affordability, the housing market is showing signs of adjustment, with listing prices modestly below year-ago levels and for-sale inventory improving from the limited supply seen in recent years," Sam Khater, Freddie Mac's chief economist, said in his comments on this week's survey.
Lender Price data posted on the National Mortgage News website had the 30-year FRM product at 6.89%, the first time it fell below 6.9% in several weeks.
The 10-year Treasury yield, a benchmark used to help price mortgages, went from a July 31 close of 4.75% down to 4.62% on Aug. 3. But on Thursday morning, at 11 a.m., it was back up to 4.65%.
Conforming mortgage rates according to the Mortgage Bankers Association's Weekly Application Survey also rose to 6.81% for the period ending July 31, the highest in a year.
Preliminary reports of some progress on the geopolitical front have tempered the rise in daily mortgage rates, said Kara Ng, senior economist at Zillow Home Loans, in a Wednesday evening statement.
"Still, the backdrop remains complicated — year-over-year comparisons are less favorable than they were, and geopolitical negotiations don't always follow a straight line," Ng said. "Slightly lower mortgage rates in recent days also come amid a divided Fed, whose next move is more likely to be a hike than a cut."
Higher borrowing costs combined with what Ng termed as "tougher year-over-year comparisons" are leading her to predict "a softer second half for housing."
Nigel Green, CEO of the deVere Group, points to market data, which prices the likelihood of a Federal Open Market Committee 25 basis point rate hike in September at over 60%.
This change in sentiment "in a single month tells you the debate inside the Fed has genuinely changed, not just the mood on trading desks," Green said.
The concern is over inflation driven by rising oil prices.
"Officials who felt comfortable holding steady in June are now looking at a very different inflation picture heading into September," Green commented.
