Mortgage Rates Today, Friday, August 7: Higher for Now

Mortgage rates are a little higher this morning, but are likely to soften on the heels of a lackluster jobs report.

The average interest rate on a 30-year, fixed-rate mortgage rose to 6.54% APR, according to rates provided to NerdWallet by Zillow. This is seven basis points higher than yesterday but 16 basis points lower than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

This morning, the Bureau of Labor Statistics released the Employment Situation Summary for July — data that’s better known as the jobs report. Expectations were that the country would add 83,000 jobs and unemployment would remain flat, and they were half right. Unemployment was basically stable, but the U.S. actually shed 23,000 jobs in July.

The potentially worse news was that numbers for May (which were quite good) and June (already not great) were revised downward. The total number of jobs added in those months had been reported as 186,000. With the revisions, that’s down to 83,000.

Markets have been anticipating rate hikes as the Federal Reserve responds to relentless inflation. But if the labor market’s struggling, that makes the Fed’s course of action less obvious. Keep reading below the chart for more on how that works.

P.S.: While the economy never sleeps, markets are closed on the weekends. The rates you see Friday are unlikely to change much (if at all) until Monday.

Average mortgage rates, last 30 days

📈 What influences mortgage rates?

Mortgage rates are constantly changing, since a major part of how rates are set depends on reactions to new inflation reports, job numbers, Fed meetings, global news … you name it. For example, even tiny changes in the bond market can shift mortgage pricing.

This morning’s jobs report was unfortunately right in line with what we saw from the private sector in Wednesday’s ADP Employment Report, which also came in well below expectations.

Today’s news already has bond yields falling as markets start to reevaluate the outlook for the year’s remaining Federal Reserve meetings. That should bring down mortgage rates a little, though the situation could change when we get fresh inflation data — and we’re about to. The Bureau of Labor Statistics will release the July Consumer Price Index, a key measure of inflation, on Wednesday.

“The [employment] data doesn’t make things any easier for the Fed, who are looking for a clear picture on where the risks are biggest: inflation or the labor market,” says NerdWallet senior economist Elizabeth Renter. “Next week’s economic data will help guide their next meeting, but they’ll likely still be left with opaqueness and having to make best guess decisions.”

People say the Federal Reserve raises or cuts rates, but really it’s just one rate: The federal funds rate, which is an overnight borrowing rate for banks. But that super-short-term rate is highly influential. Changes to the federal funds rate ripple outward to every corner of the economy. When it looks like the Fed could make a move, mortgage lenders tend to start pricing it into their rates ahead of any official announcement.

Here’s why this data could make the Fed’s next decisions tougher. The Fed usually raises the federal funds rate to curb inflation; the bankers lower the funds rate to encourage hiring. We know from the Fed’s July meeting — where the funds rate was held steady — that three dissenters already wanted a rate hike to fight inflation. Weak employment gives the folks who wanted to hold rates steady, or who may even be amenable to a rate cut, more evidence for their case.

If inflation’s looking rough, any downward movement mortgage rates get off of today’s employment data is likely to be curtailed. But if inflation shows any sign of tempering, we could get some softening from mortgage rates.

Refinancing might make sense if today’s rates are at least 0.5 to 0.75 of a percentage point lower than your current rate (and if you plan to stay in your home long enough to break even on closing costs).

With rates where they are right now, you could start considering a refi if your current rate is around 7.04% or higher.

Also consider your goals: Are you trying to lower your monthly payment, shorten your loan term or turn home equity into cash? For example, you might be more comfortable with paying a higher rate for a cash-out refinance than you would for a rate-and-term refinance, so long as the overall costs are lower than if you kept your original mortgage and added a HELOC or home equity loan.

If you’re looking for a lower rate, use NerdWallet’s refinance calculator to estimate savings and understand how long it would take to break even on the costs of refinancing.

🏡 Should I start shopping for a home?

There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.

If the answer is yes, don’t get too hung up on whether you could be missing out on lower rates later; you can refinance down the road. Focus on getting preapproved, comparing lender offers, and understanding what monthly payment works for your budget.

NerdWallet’s affordability calculator can help you estimate your potential monthly payment. If a new home isn’t in the cards right now, there are still things you can do to strengthen your buyer profile. Take this time to pay down existing debts and build your down payment savings. Not only will this free up more cash flow for a future mortgage payment, it can also get you a better interest rate when you’re ready to buy.

🔒 Should I lock my rate?

If you already have a quote you’re happy with, you should consider locking your mortgage rate, especially if your lender offers a float-down option. A float-down lets you take advantage of a better rate if the market drops during your lock period.

Rate locks protect you from increases while your loan is processed, and with the market forever bouncing around, that peace of mind can be worth it.

🤓 Nerdy Reminder: Rates can change daily, and even hourly. If you’re happy with the deal you have, it’s okay to commit.

🧐 Why is the rate I saw online different from the quote I got?

The rate you see advertised is a sample rate — usually for a borrower with perfect credit, making a big down payment, and paying for mortgage points. That won’t match every buyer’s circumstances.

In addition to market factors outside of your control, your customized quote depends on your:

Even two people with similar credit scores might get different rates, depending on their overall financial profiles.

👀 If I apply now, can I get the rate I saw today?

Maybe — but even personalized rate quotes can change until you lock. That’s because lenders adjust pricing multiple times a day in response to market changes.

About the author

Kate Wood is a lending expert and certified financial health counselor (CHFC) who joined NerdWallet in 2019. With an educational background in sociology, Kate feels strongly about issues like inequality in homeownership and higher education, and relishes any opportunity to demystify government programs. Prior to NerdWallet, she wrote about home remodeling, decor and maintenance for This Old House.

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