Mortgage rates eased downward this week. It's a minor movement for a surprisingly busy news week — there's a lot going on at the moment that has implications for potential home buyers and refinancers.
The average rate on a 30-year fixed-rate mortgage fell four basis points to 6.55% APR in the week ending Aug. 20, according to rates provided to NerdWallet by Zillow. (A basis point is one one-hundredth of a percentage point.) We calculate our weekly average using daily APRs recorded over the past five business days.
If you're on the fence about starting a home search, your readiness matters way more than what the market's like. And if you are ready, the info about pending home sales below might make you feel more confident about diving in.
If you're a current homeowner waiting for the opportunity to refinance, it makes sense that you're watching mortgage rates like a hawk. So let's talk about whether this week's biggest rate-related news means mortgage rates are going to drop.
A surprise move from the Treasury
On Wednesday, the Department of the Treasury announced that it would double the scale of its weekly bond buying from $2 billion to at least $4 billion. (The Treasury issues these bonds, so yes, it's buying back its own debt.) The purchases will focus on longer-term bonds, which have been notching ever-higher yields lately. Boosting demand will hopefully bring yields down.
What did any of that just mean? Let's break it down. Bonds are investments that are basically loans: The investor buying the bond is loaning their cash to the bond's issuer, and the issuer agrees to pay them back after a set period of time. The investor also receives regular interest payments. Bonds don't offer the high-risk, high-reward zestiness of stocks, but they're super reliable.
But not every investor holds bonds until maturity, and that's where things get spicy. Bonds have set rates of return, but prices can vary when they're resold. If an investor can buy a bond at a lower resale price, that fixed rate of return — known as the yield — is now higher relative to the price. (Similarly, when bond prices go up, the yield falls.)
For a bunch of reasons, including the Iran war and the rise of AI, bond yields have been rising as bonds themselves become less attractive to investors. This Treasury move is trying to counteract that dynamic, and here's why that matters for mortgage rates.
Mortgage rates are often indexed to the 10-year Treasury note, because these investments act a lot like 30-year home loans. (Yes, there is a 30-year Treasury, but since most homeowners sell or refinance well before their loans' terms are up, the 10-year is a better proxy.) When the yield on the 10-year Treasury rises, mortgage rates go up, too — and they've both been rising for months.
Whether this Treasury initiative will make much difference remains to be seen. Markets' initial reaction was super positive, but yields are back up today. While $4 billion a week is a lot of money, unfortunately it's a drop in the bucket relative to the now $40 trillion national debt.
This news might not bring mortgage interest rates much lower in the short term. But now you get why watching bond market headlines may be worthwhile if you're tracking mortgage rates.
A moribund market with a silver lining
This week we also got new numbers on how the housing market's doing, with the Tuesday release of July pending home sales data from the National Association of Realtors (“pending” means the contract's been signed, but the loan hasn't yet closed). And oof, it's been a cruel summer.
July's pending sales were down both month-over-month and year-over-year. On a monthly basis, pending sales were at their lowest level since January, a time of year when you'd expect sales to be slow. Rising mortgage rates throughout July likely contributed to the unexpected summer slump, but it wasn't just rates spooking potential buyers. After all, we saw a year-over-year decrease despite mortgage rates being decently lower last month than they were in July 2025.
"Buyers are still out there, but because hiring has slowed and people are watching their own job security more closely, nobody wants to sign a 30-year commitment when they're worried about next quarter," Mike Miedler, president and CEO of Century 21 Real Estate, said in an emailed commentary. But he also noted, a tepid market can present opportunity if you're prepared. "Less competition means time to evaluate a property, negotiate repairs and seller concessions, and make a decision at your own pace instead of somebody else's."
That gels with what we saw in NerdWallet's July Homebuying Climate Index. Each month, we analyze five key economic indicators to gauge how favorable conditions are for home buyers. July came in at 54.2, which is partly cloudy — that's been the homebuying weather, so to speak, for a while. Things certainly could be better, but for a well-positioned buyer a market that's less than ideal on paper can be darn good in practice.
The article Mortgage Rates Are Lower This Week. Could They Drop Further? originally appeared on NerdWallet.
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