The Latest News on Nationwide Average Mortgage Rates

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Mortgage rates are one of the most important indicators of the state of the American economy. They shed light on the banking system and the activity of the Federal Reserve, and they give a realistic picture of how things are going for average Americans when it comes to one of the most expensive necessities: housing. Here’s the latest news on average mortgage rates across the U.S. in July 2023.

The Current State of Mortgage Rates

Mortgage rates have always been a hot topic for many homeowners and potential buyers, but this became an even hotter topic in the wake of the COVID-19 pandemic. According to Bankrate, the current average 30-year fixed mortgage interest rate in the U.S. is 6.98%. This is a significant increase from the pandemic lows in 2020. Many experts predict that the 30-year fixed mortgage rate will stay within the 6% to 7% range for months to come and at least through the end of 2023, though some predict it might go higher.

Mortgage rates began moving up from their pandemic low points in the first quarter of 2022. They peaked in the fourth quarter, with 30-year fixed-rate mortgages topping 7% in October and November. However, there has been a general decline in mortgage rates across the board this summer. The average rate is, however, up slightly from its position at 6.88% last week.

Why Mortgage Rates Went Down During the Pandemic

The COVID-19 pandemic led to stay-at-home orders in the spring of 2020, resulting in layoffs and furloughs that caused a recession. Times were tough financially for people all across the country, and with a less active economy banks lowered mortgage rates to try to incentivize people to begin borrowing money again. Mortgage rates were already low, and they fell even further – just as one would expect.

Why Mortgage Rates Are Coming Back Again

The Federal Reserve and banks all across the country lowered rates in response to COVID-19, but now, with prices rising across the economy for a variety of reasons, rates are rising up again. This starts with the Federal Reserve and their setting of the discount rate.

The Federal Reserve discount rate is the interest rate set by the U.S. government’s central bank for commercial banks to borrow funds directly from them. It influences overall interest rates and economic activity, serving as a tool to control inflation and stimulate or restrain economic growth.

Other Economic Indicators

Mortgage rates are just one economic indicator that can affect homeowners and potential buyers, but there are a variety of other factors to consider when trying to gauge the health of the economy. One of the most important other indicators is inflation.

According to the Bureau of Labor Statistics’ Consumer Price Index, inflation occurred at a rate of roughly 3% for the twelve-month period ending in July 2023. This is a positive metric, as inflation reached rates into the 6% and 7% range and even as high as 8.5% in 2021 and 2022, following the pandemic.