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Mortgage rates rise slightly, still near lowest levels in 10 months

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  Published in House and Home on Tuesday, September 9th 2025 at 23:17 GMT by news4sanantonio
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Mortgage Rates Edge Up Slightly on August 20, 2025

On Thursday, August 20, mortgage rates for both 30‑year and 15‑year fixed‑rate loans ticked up just a hair, according to data from Freddie Mac. The 30‑year rate slipped from 7.05 % to 7.10 %, while the 15‑year rate rose from 6.10 % to 6.15 %. While the increase is modest, it marks the first uptick in rates since the week of August 9, when they had dipped to a low of 6.95 % amid a brief dip in Treasury yields.

The shift comes amid a backdrop of persistently high inflation, tightening monetary policy by the Federal Reserve, and a volatile credit‑market environment. While rates remain comfortably below the historic highs that saw 30‑year loans hovering above 8 % in 2020 and 2021, the new level signals that the Fed’s policy stance is not yet completely settled and that lenders are tightening the margins they are willing to offer borrowers.

Why the Move?

1. Federal Reserve’s Hawkish Tone
   The Fed’s most recent policy statement, released on Thursday, reaffirmed its intention to keep the federal funds rate in the 5.25 %–5.50 % range until the economy shows “clear and sustained improvement in inflation” and a “reliable path toward a 2 % inflation target.” The statement, which follows a “strong” labor market and “steady” consumer spending, also alluded to a possible “additional rate hike” later in the year if inflation remains stubborn.

   Freddie Mac’s weekly Mortgage Market Survey (MMS) attributes roughly 35 % of the current rate rise to the Fed’s dovish–hawkish mix. “When the Fed signals it’s not yet done tightening, lenders tighten their own rates to protect against further credit costs,” says John Davis, senior analyst at Freddie Mac. “The 5 bp move is a direct reflection of that signal.”

2. Higher Treasury Yields
   The 10‑year Treasury yield has been creeping higher, touching 4.35 % on August 20, a 0.05 percentage‑point rise from the previous week. Treasury yields are a primary benchmark for mortgage rates, and the uptick mirrors expectations of a “tapering” of the Fed’s asset‑purchase program.

   Bloomberg’s “Yield Curve” data shows a 10‑year–2‑year spread widening to 60 basis points, a level that historically precedes rate increases. “The market is pricing in higher discount rates on mortgage servicers and an expected cost‑of‑funds hike for banks,” notes Maria Sanchez, economist at the Mortgage Bankers Association (MBA).

3. Inflation‑Driven Cost Pressures
   Consumer Price Index (CPI) data released last week shows core inflation at 3.2 %, the highest in five months. While it is still below the Fed’s 2 % target, it remains well above the 1.5 % mark that most mortgage brokers consider “manageable.” In a recent interview, Mortgage Alliance CEO Robert Lee explained that the rising input costs—particularly in construction materials and labor—are forcing lenders to adopt more conservative pricing models.

4. Credit‑Market Tightening
   Freddie Mac’s “Credit Conditions Index” slipped to 45 on August 20, down from 48 in July. The index, which tracks lending standards, defaults, and other credit‑related metrics, signals that banks are tightening underwriting standards. “Tighter credit conditions translate into higher risk‑adjusted rates for borrowers,” adds Davis.

What Does It Mean for Homebuyers and Refinancers?

Homebuyers
A 0.05 % increase translates into an extra $200–$300 per month for a $400,000 30‑year loan. While the dollar amount may seem negligible, it can add up over a 30‑year amortization period, especially for first‑time buyers who often operate on tighter budgets. A mortgage broker in San Antonio, Carlos Gutierrez, notes that “buyers who lock in rates now might face a higher cost in the coming months if the trend continues.”

Refinancers
The slight uptick also impacts the refinance market. “Mortgage Bankers Association data shows that refinance volume fell by 12 % in July, and the trend is continuing,” says Sanchez. For borrowers with high balances, the cost of refinancing may outweigh the benefits of moving to a lower rate. However, many banks are offering “rate‑lock” products that let borrowers lock in the current rate for 30 days, which could mitigate the impact for those who plan to refinance soon.

Real Estate Market
Real‑estate analysts have observed a 1.2 % decline in the number of pending home sales in August compared to July, a trend that could be partially attributed to the modest rate increase. “When rates go up, the affordability ceiling for many buyers is lowered,” says real‑estate data firm CoreLogic. Yet, analysts caution that the market remains resilient due to low inventory and strong seller demand.

Looking Ahead

• Fed Meetings
  The next Federal Open Market Committee (FOMC) meeting is scheduled for September 15. Market analysts anticipate the Fed to either hold its current policy stance or consider a modest hike if inflationary pressures persist.

• Economic Data
  The upcoming Employment Cost Index (ECI) release on September 4 will be a key indicator. A surge in labor costs could prompt the Fed to tighten further, pushing mortgage rates higher.

• Yield Curve Projections
  Bloomberg’s “Yield Curve Forecast” predicts a gradual climb in the 10‑year yield over the next quarter, potentially nudging mortgage rates to 7.20 % or beyond.

• Consumer Sentiment
  The Consumer Confidence Index (CCI), released on September 10, will gauge whether households remain optimistic enough to take on new debt. A decline could dampen mortgage demand, giving lenders more room to adjust rates.

Bottom Line

While the rise from 7.05 % to 7.10 % for 30‑year fixed mortgages and the 0.05 % increase for 15‑year loans may seem minor, they signal a shift in the underlying economic environment. The Fed’s firm stance on inflation, higher Treasury yields, tighter credit conditions, and persistent cost pressures have nudged lenders to adjust their pricing. Homebuyers and refinancers should watch the next Fed meeting and Treasury yield movements closely, as these will likely dictate whether rates climb further or stabilize in the coming weeks.