Mortgage rates rose for the third straight day on Tuesday with the average top-tier 30yr fixed rate moving up a modest 0.02% to 6.75%. Notably, the bond market was actually in slightly better shape compared to yesterday--something that would normally be good news for rates. So what's the catch? As is often the case when bonds and mortgages disagree, the x factor is timing. Mortgage lenders prefer to release rates once per day (usually around 10am ET) and they only change rates if the underlying bond market makes a big enough move in either direction.   Bonds lost ground yesterday, but not enough for the average lender to go to the trouble of raising the rates set earlier in the day. As such, lenders had to adjust for that bond market weakness with this morning's offerings. Ironically, the opposite dynamic is playing out today with bonds improving versus opening levels, but not by enough for the average lender to drop the rates set this morning. Now for some context in 3 different levels: current levels are slightly below the mid-point of the past 4 weeks, but the past 4 weeks are at the top of the range seen over the past year. Lastly, the past year has been the the best 12 month stretch for rates since late 2022 and present rates remain below the mid-point of the past 4 years. [thirtyyearmortgagerates]

After ending last week near the lowest level since July 17th, mortgage rates are moving up to start the new week. Motivations are familiar. Escalation in U.S./Iran tensions is pushing fuel prices higher and bond yields continue to correlate. Bond yields correlate with consumer interest rates with near perfection. In mortgage-specific terms, the average top-tier 30yr fixed rate moved up 0.02% today to 6.73%. This is still much lower than the most recent high of 6.85%, but not quite as low as last Thursday's 6.69%.

First, the bad news: mortgage rates ended the day just a hair higher compared to Thursday, but the change was so small that many borrowers will see little--if any--difference in pricing. Now the good news: apart from yesterday afternoon, today's rates would still be the lowest in 4 weeks (i.e. you'd have to go back to July 17th to see anything lower). Lastly, some news that's neither good nor bad, but simply a bit confusing. Today's higher rates followed this morning's Retail Sales report which came in much weaker than expected. Conventional wisdom would have suggested that weaker data coincides with lower rates.  One issue is that Retail Sales is not in the same league as top tier economic reports like the inflation data seen earlier this week or the jobs report seen last Friday. Also, there can be more nuance to the retail sales data by the time traders consider temporary factors and timing. Lastly, sometimes the bonds market (bonds dictate rate movement) has simply done as well as it's going to do on any given week and it would take a much bigger surprise to overcome trading momentum that is happening for non-data-related reasons. In other words, traders can push back against the week's prevailing momentum on Friday simply as a byproduct of closing out the week's trading positions.  [thirtyyearmortgagerates]

Mortgage rates dropped noticeably on Thursday on a combination of lower oil prices and a lower inflation reading via the Producer Price Index (PPI). Rates are driven by bonds and bonds are highly responsive to the outlook for inflation and the economy. The Iran war caused inflation implications to spike and the periodic relief in fuel prices has coincided with bond market improvement (and lower rates). The official inflation data is just another form of the same benefit. Fuel prices are just one aspect of inflation--albeit a critical one, but they're more of a leading indicator. In contrast, big government data like PPI and yesterday's CPI (Consumer Price Index) help the market more accurately measure the true impact of fuel prices. PPI was only slightly lower than expected, but that was enough to account for most of today's improvement in rates. Top tier 30yr fixed rates fell 0.05% to 6.69% for the average lender. That's the lowest reading since July 17th--just one day shy of 4 weeks ago. [thirtyyearmortgagerates]

Mortgage lenders set rates around 10am ET every day, but the bond market dictates the day to day changes, and bonds were on the move throughout the overnight trading hours. Granted, the movement wasn't extreme, but much like yesterday, it suggested a bit of optimism heading into this morning's main event: the release of July's Consumer Price Index (CPI).  CPI is one of the two big inflation reports on any given month (the other being PCE) and it has more potential to cause a reaction because it comes out 2 weeks before PCE. Given that last month's CPI showed a sharp drop in inflation and that July's fuel prices had bounced back up, the market was very focused on what the data would actually reflect. As it happened, forecasters nailed it. All the top-line numbers were right in line with consensus estimates. This is apparently the result that the bond market had been positioning for. There was no additional improvement in bonds after the data, but arguably a fair amount of improvement in anticipation of just such a result.  The net effect is that the average top-tier 30yr fixed rate returned precisely in line with the 3-week lows seen last Friday. [thirtyyearmortgagerates]