Rates Fall On Cooling Inflation Data

Mortgage rates fell last week as positive inflation data has Wall Street reevaluating their predictions for rate cuts.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.89%, down from the week prior’s 6.95%. A year ago at this time, the 30-year FRM averaged 6.96%.

The 15-year was down to 6.17% from 6.25%. A year ago at this time, it was 6.30%.

“Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week and mortgage rates followed suit,” said Sam Khater, Freddie Mac’s Chief Economist. “We’re also seeing more inventory on the market, including a fair number of listings with price cuts, which is an encouraging sign for prospective buyers.”

Since mortgage rates’ spring peak, homebuyers on a $3,000 monthly budget have gained more than $20,000 in purchasing power. This is heading in the right direction, and more inventory gains will certainly help buyers overall moving forward. But inflation data is impacting the market’s judgment more than anything right now.

The latest Consumer Price Index, a measure of the cost of food, housing, gas, utilities and other goods, showed prices up by 3% YOY, coming in under analyst’s expectations.

“There is already a growing case for a September rate cut,” Keith Gumbinger, VP of mortgage site, HSH.com, told CNET. “Inflation only needs to show a step or two in the right direction between now and then to give the Fed the confidence it is seeking to begin a rate-cutting cycle.”

CME FedWatch currently projects a 89.8% chance the federal funds rate will be cut in September.

But the road to lower interest rates is likely to be long. Analysts expect affordability to remain an issue into 2026 as rate cuts and home prices take their time cooling.

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