Weekly Mortgage Rates Rise Despite Easing Economic Conditions

Mortgage rates spiked the week ending July 3, with the average rate for a 30-year, fixed-rate loan rising above 7% yet again.

The 30-year fixed-rate mortgage averaged 7.01% APR, up 20 basis points from the previous week’s average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.

If anything, mortgage rates probably should have fallen this week — and not just because folks’ minds are on hot dogs and fireworks, not home buying and selling.

Economic data that came out this week wasn’t especially splashy, but it pointed toward an economy that’s cooling down. The Federal Reserve‘s preferred measure of inflation showed that consumer prices month over month remained essentially flat. Construction spending dropped for the first time in 18 months, coming in below market expectations. Employment remains strong, but earlier numbers were revised downward, implying labor markets might be on an even keel.

Together, these figures indicate that the Federal Reserve’s strategy — raising interest rates, and then holding them high — is working. By making it more expensive to borrow, the Fed hopes to slow the rate of inflation. Less hiring and building aligns with that goal, but in remarks on Tuesday, Fed chair Jerome Powell emphasized caution.

Speaking at an economic conference in Portugal, Powell acknowledged the strength of recent numbers while urging caution. “What we’d like to see is more data like what we’ve been seeing recently,” he said. Declining to state when, exactly, the Federal Reserve might cut rates, Powell noted, “We’re well aware that if we go too soon, that we can undo the good work we’ve done.”