Mortgage Rates Dip Slightly This Week: Factors Influencing Future Trends

Mortgage rates showed a modest decline this week, amid a week filled with significant financial developments impacting potential home buyers and refinancers.

The average rate for a 30-year fixed-rate mortgage decreased by four basis points to 6.55% APR by the week ending Aug. 20, according to data provided to NerdWallet by Zillow. A basis point equals one-hundredth of a percentage point. This weekly average is calculated using daily APRs recorded over five business days.

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Prospects for homebuyers hinge more on individual readiness than market conditions. For those prepared, this week’s pending home sales data may provide confidence to proceed. Homeowners considering refinancing should closely monitor mortgage rate movements, as recent developments could signal future trends.

<Following Wednesday’s Treasury announcement of doubling weekly bond purchases from $2 billion to $4 billion, market reactions were initially positive. However, yields rebounded later, highlighting the limited immediate impact of such measures against the backdrop of a $40 trillion national debt.

Bonds, Yields, and Their Impact on Mortgages

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Bonds are fixed-income securities where investors lend money to issuers, receiving regular interest and principal at maturity. Unlike stocks, bonds are lower-risk investments, but their resale value fluctuates. Higher resale prices typically lower yields, while lower resale prices increase them.

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Recent trends show bond yields rising due to factors like geopolitical tensions and AI advancements, prompting investors to seek alternatives. The Treasury’s bond-buying initiative aims to counteract this by boosting demand for longer-term bonds. Mortgages, often tied to the 10-year Treasury, react similarly to yield changes, making this policy significant for rate forecasts.

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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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