Mortgage Rates Hold Steady as Fed Decision Looms

Mortgage Rates Hold Steady as Fed Decision Looms

Mortgage rates stayed flat this week after dipping to a 10-month low earlier in August. The average 30-year fixed mortgage rate held at 6.58% for the week ending August 21, according to Freddie Mac, nearly unchanged from 6.46% a year ago.

“The 30-year fixed-rate mortgage remained flat this week,” said Sam Khater, Freddie Mac’s chief economist. “Purchase applications are outpacing 2024, though many buyers remain on the sidelines waiting for lower rates.”

Fed in Focus

All eyes are on the Federal Reserve’s September 17 meeting, where a rate cut appears likely. Futures traders see an 85% chance of a quarter-point reduction, though mixed economic data makes the outcome uncertain.

• Weak jobs report → supports easing
• Uptick in July inflation → clouds outlook

Realtor.com® economist Jake Krimmel noted, “It’s been a cruel summer for buyers, sellers, and builders alike, but lower rates and easing uncertainty could jumpstart the fall market.”

What Moves Mortgage Rates

While Fed policy influences markets, mortgage rates are tied more directly to the 10-year Treasury yield:

• Higher inflation → higher yields → higher mortgage rates
• Falling inflation or weakness in labor market → lower yields → lower mortgage rates

Individual borrower factors such as credit score, down payment, and loan type also determine the final rate offered.

Takeaway for Buyers and Sellers

Rates near 10-month lows could lift buyer confidence heading into fall, but a Fed rate cut won’t guarantee immediate relief. Still, easing borrowing costs may be enough to re-energize the housing market as summer turns to fall.

Information from Realtor.com