Where Mortgage Rates Are Headed in August

Mortgage rates spent July climbing to their most expensive level in more than a year before pulling back this week. Data from the Mortgage Bankers Association put rates as high as 6.76% in July, with renewed geopolitical tensions the main culprit; Freddie Mac's latest reading shows the 30-year fixed rate back in the mid-6% range.

Industry forecasters do not see that range shifting much in August. Tony Davis of Atlantic Home Mortgage expects the 30-year fixed rate to sit between roughly 6.4% and 6.8%, while Andrew Gosselin, a CPA at Save My Cent, is slightly more optimistic at 6.25% to 6.5% for most of the month. Both predictions sit comfortably above the 6% mark — and Gosselin says he does not expect a sustained move below 6% unless inflation comes in better than predicted.

The near-term path will be set by a standoff between two forces, analysts say. Zillow senior economist Orphe Divounguy points to rising energy costs flowing through to gasoline, trucking and airfreight prices and, eventually, into food and other goods. Davis counters that the job market is starting to slow. Mike Chadwick of Fiscal Wisdom Wealth Management adds that the economy and markets are weak enough that rates could surprise to the downside. The CME FedWatch tool currently prices a 63% probability of a Federal Reserve rate hike at the September meeting.

For homebuyers, the practical picture is steadier than the headline rates suggest. Michael Pearson of AD Mortgage says prices are stabilizing — even falling in some markets — and that after years of elevated rates, the shock is over, supporting continued purchase momentum. Jeff DerGurahian, head economist at loanDepot, cautions that a rate drop would not automatically make homes cheaper: lower rates bring sidelined buyers back, stiffening competition.

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What's Driving August's Forecasts: Inflation, Energy Costs and the Fed

The clearest signal in these forecasts is not a single number but a shared description of the market: a range-bound August in which every data release swings sentiment. Three dynamics stand out.

The Inflation-Jobs Standoff Behind the 6.25%–6.8% Band

Davis describes rates as a real battle between inflation that will not budge and a job market that is starting to slow — a description the other forecasts effectively endorse. On one side, Divounguy's point is concrete: higher energy costs are already flowing through to gas prices, premium trucking and airfreight, and from there into food and other goods, keeping headline inflation sticky. On the other, Chadwick notes the economy and markets look weak enough that rates could surprise on the downside. With both forces live, each jobs report and inflation print is likely to move rates within the band rather than establish a new trend — which is why the pros expect enough ups and downs to make both optimists and pessimists feel vindicated, at least for a while.

The September Fed Meeting Is Already Priced In

The CME FedWatch tool puts a 63% probability on a rate hike at the Fed's September meeting. Mortgage rates do not move in lockstep with the Fed's short-term policy rate — they track longer-dated bond yields and expectations — but a hike would reinforce a higher-for-longer backdrop that keeps mortgage coupons near current levels. The forecasters' reluctance to call for a sustained break below 6% largely reflects that the September path is already leaning toward tighter policy.

Lower Rates Wouldn't Automatically Mean a Better Deal

DerGurahian's point is that a rate decline will not necessarily make homes cheaper, and Davis spells out the mechanism: lower rates pull sidelined buyers back into the market, which means more competition, fewer seller concessions and less negotiating power. Buyers can end up trading a lower mortgage rate for a higher purchase price. Pearson, meanwhile, reports prices stabilizing or falling in some markets and describes the rate shock as over, which suggests purchase volume — not affordability — is the near-term story.

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How Buyers Can Navigate a Mid-6% Rate Market

The forecasts point to a straightforward playbook for anyone buying or selling in the coming weeks, without trying to time the exact rate.

  • Budget for the top of the forecast range: test affordability at roughly 6.8%, since Davis sees the 30-year fixed rate between 6.4% and 6.8% in August.
  • Don't hold off on a home that fits your budget to wait for a sub-6% rate: Gosselin says a sustained move below 6% is unlikely unless inflation comes in better than predicted, and DerGurahian notes refinancing remains an option if rates later fall.
  • Expect that any meaningful rate drop will bring competition: Davis says lower rates draw sidelined buyers back, meaning fewer concessions and less negotiating power — possibly a higher purchase price.
  • If you are selling in a low-inventory market, price realistically: Lund says sellers who price realistically should keep receiving offers from bona fide buyers.
  • Watch the September Fed meeting and the next inflation prints: CME FedWatch currently prices a 63% probability of a rate hike, and Divounguy identifies energy-driven inflation as a key upside risk to rates.