Mortgage rates ended the week with less improvement than the economic data might suggest. July Retail Sales fell 0.6%, adding to a string of softer-than-expected reports on employment and inflation. Together, the data has significantly reduced expectations for another Federal Reserve rate hike in September.
Normally, that combination would provide more relief for mortgage rates. However, elevated oil prices, geopolitical uncertainty, and continued weakness in mortgage-backed securities have limited the improvement. The 10-Year Treasury is trading near 4.66%, leaving mortgage rates relatively stubborn despite an otherwise encouraging week of economic news.
What’s Happening Now?
Retail Sales fell 0.6% in July, the largest monthly decline since May 2025 and another sign that consumer spending may be slowing.
The week’s major economic reports generally came in softer than expected, including employment, CPI, PPI and Retail Sales.
Expectations for a September Fed rate hike have fallen significantly as investors respond to signs of slower growth and easing inflation.
Treasury yields have improved modestly, but mortgage-backed securities have not benefited to the same degree, limiting improvement in mortgage rates.
Oil prices remain elevated, keeping inflation concerns in the picture and putting additional pressure on longer-term rates.
Geopolitical uncertainty remains a factor, particularly developments surrounding the Strait of Hormuz and their potential impact on energy prices.
What’s Next?
FOMC Minutes – August 19 The minutes from the Federal Reserve’s July meeting could provide more insight into policymakers’ views on inflation, the labor market and the path forward for interest rates. Markets will be watching closely for any indication that Fed officials disagree with investors’ increasingly strong expectations for the Fed to remain on hold in September.
Treasury Auctions Demand for upcoming longer-term Treasury auctions will also be closely watched. Strong investor demand could help keep yields in check, while weaker demand could put renewed upward pressure on longer-term rates.
Fed Commentary Comments from Federal Reserve officials could create additional volatility, particularly if policymakers push back against the market’s reduced expectations for another rate increase.
Bottom Line for Borrowers This week delivered several encouraging signals for mortgage rates. Hiring slowed, inflation came in softer than feared, producer prices eased and consumer spending showed signs of weakening. Together, those reports have significantly reduced expectations for another Fed rate hike in September.
What’s notable is that mortgage rates haven’t improved as much as the economic data would normally suggest. While Treasury yields have responded to the softer reports, elevated oil prices, geopolitical uncertainty and weakness in mortgage-backed securities continue to keep some pressure on mortgage pricing.
For borrowers, the overall economic trend is encouraging, but we’re still likely to see some volatility. Continued progress on inflation and economic growth, along with easing pressure from energy prices and global events, could create more room for mortgage rates to move lower.
Key Level to Watch The 10-Year Treasury is trading near 4.66%. A sustained move below 4.60% would be a positive signal for mortgage pricing. For now, the market’s muted response to a week of softer economic data suggests it may take more than favorable reports alone to push mortgage rates meaningfully lower.
Rate info as of 08/14/2026, subject to change. Not financial/investment advice. Consult a financial advisor for your specific situation.
Mortgage rates trended slightly lower last week. Existing home sales increased in July, as did inflation on the consumer price index. Mortgage application submissions increased two weeks ago, while continuing jobless claims decreased and initial jobless claims increased in recent weeks. Retail sales declined in July and consumer sentiment decreased in August.
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