Hi Reader,

The average 30-year fixed mortgage rate ended the week at 6.81%, up from 6.71% the prior week, according to Mortgage News Daily. Freddie Mac reported an average rate of 6.58%, up from 6.55% the week before.

What's remarkable is that we are back up at the same level as exactly a year ago: 6.81%.

Since February, we've been in this zigzag pattern of upward movement, largely driven by inflation caused by oil price increases from the instability in the Gulf region.

Rinse, repeat.

​As we discussed last week, inflation data readings are what is mainly informing the markets, and inflation is presently mainly driven by oil prices.

So, the two things that will bring mortgage rates down (and 10-year Treasury yields down) would be 1) lower oil prices, and in turn 2) lower inflation data. Until that happens, I'm afraid we may be stuck in the zigzaggy world of mortgage rates above the year's low, or even above the rates we saw in the fall.

​Here's what crude oil is doing:

Since Friday, crude oil has come down from $92 to $84. That is because there has been a pause in attacks between the U.S. and Iran over the weekend, directly affecting the ability of oil to move through the Middle East distribution channels.

Higher energy prices can increase transportation, manufacturing, and consumer costs throughout the economy, potentially making inflation more difficult for the Federal Reserve to control, having a direct effect on the bond market and hence, the mortgage rates.

​Here is what the 10-year Treasury yield has looked like since the start of the Iran/U.S. war:

If you scroll up to the top mortgage chart in this email, and condense the timeline a bit, the 10-year Treasury chart almost exactly matches in pattern the mortgage chart.

The labor market also continues to look remarkably strong. Weekly jobless claims unexpectedly fell to 187,000, the lowest level since 1969. While that is great news for workers, it gives the Federal Reserve less reason to lower interest rates, and may even increase speculation that rates could remain higher for longer.

What lies ahead?

We have a busy week of data which includes:

• The Federal Reserve’s July interest-rate decision (Wednesday)
• ​Second-quarter GDP (Friday)
• ​The Personal Consumption Expenditures Price Index, the Fed’s preferred inflation measurement (Friday)

In other words, mortgage rates are currently being pulled between a resilient economy and renewed inflation concerns. Until markets see clearer evidence that inflation is moving lower, rates may remain elevated and volatile.

Waiting for a lower rate is not necessarily saving buyers money

It is easy for buyers to focus exclusively on mortgage rates. But rates are only one part of the cost of housing, and the other parts have continued to rise.

​The median home price in New York State reached a record $475,000 in June, an increase of 8% from one year ago. That happened even as the number of homes listed for sale increased for the 16th consecutive month.

Some markets have experienced even more dramatic appreciation. Buffalo-area housing prices have nearly doubled since the beginning of the pandemic, while New York City housing prices have risen more than 74%.​

Renters are not escaping higher costs either.

​The median Manhattan rent reached a record $5,295 per month in June, a 6% increase from one year ago. The average studio apartment reached $4,014 per month, while the average one-bedroom reached $5,408. At the same time, the number of available rental listings fell 16%.

This is why waiting for mortgage rates to fall can be a costly strategy.

Even when rates eventually improve, the savings from a slightly lower rate can be exceeded by a higher purchase price, another year of rent payments, and the equity a buyer missed the opportunity to build.

Buyers who purchased a year ago may not have received the perfect mortgage rate. But they locked in last year’s home price, avoided this year’s rent increase, began paying down their mortgage, and participated in the appreciation that occurred during the year.

A mortgage rate can potentially be refinanced later. The purchase price cannot.

Helping first-time buyers find the smartest path forward

I especially love working with first-time home buyers because this market requires much more than simply quoting an interest rate.

My role is to help buyers understand their options, evaluate the tradeoffs, and create a financing strategy that works both today and over the long term.

That may mean:

1. Determining the right down payment
2. Comparing loan programs
3. Evaluating whether paying points makes sense
4. Keeping cash available after closing
5. Identifying a purchase price that allows the buyer to comfortably build wealth over time.

The market may feel complicated, but homeownership remains one of the most powerful ways to create long-term financial stability.

The key is having a strategy and understanding that the best opportunity is not always the one with the lowest advertised rate.

I hope your week is off to a great start!

-Nicole

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Nicole Hamilton Bernheimer | NMLS #2354049

nicole@homeownering.com, 917-650-0167

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