Mortgage rates continued to increase, rising another eight basis points last week according to the Freddie Mac Primary Mortgage Market Survey as of July 30th. This leaves rates at their highest levels in a year, driven by inflation fears, rising oil prices from Middle East conflicts, and the Federal Reserve holding interest rates steady. Still, today’s 30-year fixed rate is lower than this same time last year and in most of the country wage growth has outpaced home-value growth this year. That has helped affordability, said Kara Ng, a senior economist at Zillow.
Mortgage applications decreased 6.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 24th. “Following last week’s spike in oil prices, mortgage rates moved higher to the highest rate since August 2025,” said Joel Kan, CMB, MBA’s Vice President and Deputy Chief Economist. “This upward trajectory in rates continues to significantly impact refinance borrowers, with a 10 percent decline in refinance applications, including a steeper drop in government refinances. Despite housing inventory increasing in certain markets, higher rates have added to ongoing affordability challenges for many homebuyers, which drove the decrease in purchase activity over the week.”
Overall inflation fell in June for the first time in six years. The Personal Consumption Expenditures price index, the gauge used by the Federal Reserve for its target inflation rate, dropped 0.1% from May, bringing the annual rate to 3.7% from 4.1%, Commerce Department data showed. The temporary truce in the war with Iran sent gas prices, and thus inflation, lower in June, providing some fuel for a crucial economic engine: the American consumer. The welcome readings, however, are likely temporary. “Setting aside the volatility caused by oil and energy prices, underlying inflation is moving right around 3%, so that’s not going to provide material comfort to households or investors,” said Joe Brusuelas, RSM US chief economist. “The improvement in June will be partially or completely reversed by the upward volatility in July.”
A divided Federal Reserve left interest rates unchanged on Wednesday even as U.S. central bank chief Kevin Warsh pledged an unwavering commitment to bring inflation down, a message that left markets confused about just what he was prepared to do. Warsh, in what has become characteristic fashion, declined during a press conference to offer any clues about what action would be needed to contain inflation that has held above the Fed’s 2% target for more than five years, pledging only: “This Fed will not waver.” The widely expected decision to leave policy on hold drew dissents from three of the twelve FOMC members who wanted a quarter-percentage-point hike instead. “It’s hard to know what to make of Warsh’s remarks, which involved a lot of well-turned phrases but little in the way of a coherent macro view,” Michael Feroli, chief U.S. economist at J.P. Morgan, wrote in a note after Warsh’s press conference.
