Mortgage Rates Today, Wednesday, August 12: Noticeably Lower

Mortgage rates dropped today, as the latest inflation report brought few surprises. That could help rates remain relatively steady for now.

The average interest rate on a 30-year, fixed-rate mortgage dropped to 6.59% APR, according to rates provided to NerdWallet by Zillow. This is 10 basis points lower than yesterday and unchanged from a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

A significant drop is eye-catching, but bear in mind that you should consider mortgage interest rates’ overall direction, not just what’s going on today. Right now, mortgage rates are caught in a tug-of-war between stubborn inflation and a weakening job market. Keep reading below the chart for more on how these opposing forces are pulling rates in different directions.

Last week was all about jobs, this week’s all about inflation, and wouldn’t you know it — those are the two components of the Federal Reserve’s dual mandate. The Fed uses two key goals, maximum employment and a target 2% rate of inflation, to try to keep the U.S. economy on a steady keel.

Predictions for the Employment Situation Summary for July were that the country would add 83,000 jobs and unemployment would remain flat. They were half right. Unemployment was basically stable, but the U.S. actually shed 23,000 jobs in July.

The potentially worse news was that numbers for May (which were quite good) and June (which were already poor) were revised downward. The total number of jobs added in those months had been reported as 186,000. With the revisions, that’s down to 83,000.

“The data doesn’t make things any easier for the Fed, who are looking for a clear picture on where the risks are biggest: inflation or the labor market,” says NerdWallet senior economist Elizabeth Renter.

Here’s where things could get tricky for the Federal Reserve. The Fed usually raises the federal funds rate to curb inflation; the bankers lower the funds rate to encourage hiring. We know from the Fed’s July meeting — where the funds rate was held steady — that three dissenters already wanted a rate hike to fight inflation. Weak employment like we saw in last week’s jobs report gives the folks who wanted to hold rates steady, or who may even be amenable to a rate cut, more evidence for their cases.

For mortgage rates, today’s inflation report could take a little pressure off. Inflation is still running hotter than the Fed would like, but because the numbers matched expectations and annual inflation eased slightly compared to June, the report is unlikely to push rates sharply higher on its own.

Refinancing might make sense if today’s rates are at least 0.5 to 0.75 of a percentage point lower than your current rate (and if you plan to stay in your home long enough to break even on closing costs).

With rates where they are right now, you could start considering a refi if your current rate is around 7.09% or higher.

There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.

Rate locks protect you from increases while your loan is processed, and with the market forever bouncing around, that peace of mind can be worth it.

In addition to market factors outside of your control, your customized quote depends on your:

Even two people with similar credit scores might get different rates, depending on their overall financial profiles.

Maybe — but even personalized rate quotes can change until you lock. That’s because lenders adjust pricing multiple times a day in response to market changes.

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