Rates climbed for most of the month.
Since mid-July, the 30-year fixed rate has been elevated for five straight weeks, reaching 6.85% on the national average before finally ticking down. That peak of 6.85% was the highest level in over a year.
Trump is escalating rhetoric, including against a US ally.
Trump threatened to bomb Oman if it "gets in the way" of US efforts to reopen the Strait of Hormuz. He also said no talks are currently underway, just a day after claiming his administration had opened a back channel with Iran's Revolutionary Guard. Separately, Iran's Foreign Ministry says it reached an agreement with Oman on future shipping routes through the strait, though a full resolution hasn't followed.
Markets are feeling the strain.
Global oil prices reached their highest levels of the year as hopes of a resolution fade, which ties directly back into the mortgage-rate picture. Day-to-day mortgage rate moves have largely tracked headlines out of the Iran conflict, rising when it escalates and falling when it ebbs.
Inflation data added some optimism. The August inflation report showed headline CPI rising just 0.07% for the month, with core CPI up 0.2% and year-over-year inflation matching its lowest level since March 2021, giving yields a modest reason for hope.
Rates aren't going much lower anytime soon. Economists I follow expect rates to keep hovering between 6.5% and 7% until the Iran War is resolved. I don’t see any experts that forecast rates dropping below 6% in the near future. The Fed has held off cutting rates and may even raise them if inflation (and oil) don’t find a way to go lower in the next few months.
