Weekly Mortgage Rates Rise Despite Easing Economic Conditions
Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.
Mortgage rates spiked the week ending July 3, with the average rate for a 30-year, fixed-rate loan rising above 7% yet again.
The 30-year fixed-rate mortgage averaged 7.01% APR, up 20 basis points from the previous week's average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.
Rising rates, ebbing economy
If anything, mortgage rates probably should have fallen this week — and not just because folks' minds are on hot dogs and fireworks, not home buying and selling.
Economic data that came out this week wasn't especially splashy, but it pointed toward an economy that's cooling down. The Federal Reserve's preferred measure of inflation showed that consumer prices month over month remained essentially flat. Construction spending dropped for the first time in 18 months, coming in below market expectations. Employment remains strong, but earlier numbers were revised downward, implying labor markets might be on an even keel.
Federal Reserve unbothered
Together, these figures indicate that the Federal Reserve's strategy — raising interest rates, and then holding them high — is working. By making it more expensive to borrow, the Fed hopes to slow the rate of inflation. Less hiring and building aligns with that goal, but in remarks on Tuesday, Fed chair Jerome Powell emphasized caution.
Speaking at an economic conference in Portugal, Powell acknowledged the strength of recent numbers while urging caution. "What we’d like to see is more data like what we’ve been seeing recently," he said. Declining to state when, exactly, the Federal Reserve might cut rates, Powell noted, "We’re well aware that if we go too soon, that we can undo the good work we’ve done."
Even though a potential autumn Fed rate cut would likely only be a quarter of a percentage point — a little more than the 30-year rate moved on its own this week — a shift into a rate-lowering phase could relieve upward pressure on mortgage rates.
