Mortgage Rates Today, Wednesday, July 8: Back on the Rise

Mortgage rates are a little higher this morning and could keep going up as the U.S.-Iran ceasefire appears to have fallen apart. The “are a little higher” happened because the United States resumed strikes on Iran yesterday in response to reported Iranian strikes on ships in the Strait of Hormuz. The “could keep going” is my prediction since today President Trump said he believes the ceasefire is over and that’s already sent oil prices higher.

The average interest rate on a 30-year, fixed-rate mortgage rose to 6.39% APR, according to rates provided to NerdWallet by Zillow. This is three basis points higher than yesterday but one basis point lower than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

Throughout the spring, mortgage rates were extremely sensitive to events in the Middle East, as bond markets — which play a key role in determining mortgage rates — were wracked with inflation fears. But as the conflict wore on, markets settled in and we only saw reactions to major events. With June’s memorandum of understanding and a more durable ceasefire, this summer rates have been more attuned to the normal domestic stuff we’d expect during peacetime — think economic data and Federal Reserve updates.

As I mentioned above, over the past month-plus mortgage interest rates have been more responsive to the type of domestic news that normally drives rate changes. For the most part, that’s economic data and statements from members of the Federal Reserve. These are parts of the same whole, as economic data is often interpreted from the perspective of the Fed — how will the central bankers think about and react to these numbers?

But for the Federal Reserve to feel confident about making that move, the central bankers also need to feel assured that the labor market is healthy. Higher interest rates slow inflation by discouraging business borrowing and expansion, which can also slow hiring.

Lately it had seemed like this wouldn’t be a problem since the labor market was doing surprisingly well. But those expecting fireworks from last week’s Employment Situation Summary from the Bureau of Labor Statistics got more fizzle than spark. June job gains came in well below projections, at 57,000 compared to an anticipated 100,000 or more.

The jobs data felt like assurance that the central bankers could comfortably remain in wait-and-see mode, especially with the U.S.-Iran ceasefire and the reopened Strait of Hormuz potentially alleviating war-driven inflation. (Inflation would still be a fire in need of putting out, but at least no one would be pouring gas on it. Expensive, expensive gas.)

But if the ceasefire falls apart, inflation fears will ratchet back up — and a Fed rate hike, already no longer an “if” but a “when,” could potentially come sooner. Both of those forces will likely push mortgage rates higher.

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 6.89% 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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