Mortgage Interest Rates

Average mortgage rates dipped in July, according to Freddie Mac. The average 30-year fixed-rate mortgage was 6.72%, 10 basis points (bps) lower than June. Meanwhile, the 15-year rate declined 9 bps to average at 5.86%. Compared to a year ago, the 30-year rate is down 13 basis points (bps), and the 15-year rate is 28 bps lower.

Why are Interest Rates Continuing to Rise?

The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.37% in July – a 6 bps decline from the previous month.  

However, the primary reason interest rates have remained elevated pertains largely to the uncertainty surrounding tariffs. There also continues to be growing concerns over budget deficits.

When Will Interest Rates Decline?

On July 30, the Federal Open Market Committee (FOMC) solidified market expectations by voting to keep the federal funds rate unchanged at 4.25% to 4.50%. However, just days later, the July employment report released by the Bureau of Labor Statistics on Friday, August 1, showed downward revisions to job gains in May and June. In response, yields fell to around 4.2% as investors perceived an increased likelihood of a rate cut at the Fed’s next meeting in September. 

Faced with record-high prices for homes and stubbornly high interest rates, many would-be buyers will continue to stay on the sidelines until housing affordability conditions improve.