The average rate on 30-year fixed mortgages rose to 6.66% for the week ending Aug. 27, up 1 basis point from last week.
Mortgage rates slightly increased this week but remained relatively stable as bond markets—coming off a month of volatility—await Federal Reserve Chairman Kevin Warsh's inaugural keynote address at the annual Jackson Hole conference.
The average rate on 30-year fixed home loans rose to 6.66% for the week ending Aug. 27, up 1 basis point from 6.65% the previous week, according to Freddie Mac. For perspective, rates averaged 6.56% one year ago.
"Mortgage rates changed little this week averaging 6.66%," says Sam Khater, Freddie Mac's chief economist. "The economy remains resilient, demonstrated by steady consumer spending and rising household incomes. More homes coming on the market and slower price growth in many areas are giving buyers better options and helping create a more balanced housing market."
Home loan rates have hovered in the mid-6% range since the beginning of August as 10-year Treasury yields have stayed elevated in reaction to geopolitical tensions in the Middle East and inflation data, bouncing between 4.65% and a 20-month high of nearly 4.75%.
July's Personal Consumption Expenditures (PCE) report, the Fed's preferred inflation gauge, came in slightly hotter than expected on Wednesday as inflation held at 3.7% annually rather than cooling to the 3.6% economists forecast.
"That kept the report from pushing yields meaningfully in either direction as it wasn't hot enough to spark a hawkish repricing, but it wasn't cool enough to build the case for near-term Fed cuts either," says Realtor.com® senior economist Hannah Jones.
While hawkish Fed policymakers continue to argue for a rate hike to curb inflation, financial markets put the probability of the central bank holding its current 3.5%-3.75% range at 65% in September, according to CME FedWatch.
All eyes now turn to Warsh's speech at the annual Jackson Hole Economic Policy Symposium in Wyoming on Friday, his first as chair.
He is expected to address still-elevated inflation, which came in at 3.4% in July, and the ongoing Iran war's ripple effects on energy prices.
"Markets largely expect a neutral tone, but because that neutral outcome is already priced in, any surprise has potential to move Treasury yields, and with them, mortgage rates," notes Jones.
For much of the year, mortgage rates have been on an upward trajectory, driven largely by the U.S.-Iran conflict's effect on oil prices, which has kept inflation expectations elevated.
(Realtor.com) Jones says that for homebuyers, that means they have not gotten much relief on the financing side over the past seven months.
Home prices, however, tell a different story, and the median listing price has now fallen year over year for nine consecutive months, down 2.4% in July to $428,950.
"Combined with growing inventory and homes sitting on the market slightly longer, this points to a market that's rebalancing, giving buyers real room to negotiate even where rates haven't budged," says Jones.
How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you'll receive. The higher the credit score, the lower the interest rate you'll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a "fair" rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. Ultimately, they want to make sure you're able to pay back the loan.