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3 ways mortgage interest rates could drop this August

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There are multiple ways in which mortgage rates could drop this August.

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Homebuyers who didn’t take advantage of record-low mortgage interest rates in 2020 and 2021 have had to cope with exponentially higher rates ever since. Thanks to inflation and a concentrated effort by the Federal Reserve to tame it, the federal funds rate soared last year to its highest level in decades. And mortgage rates soon followed, hitting their highest point since 2000. 

As inflation has steadily cooled since, however, mortgage rates have fallen slightly. And they’re already down by almost a full percentage point from where they were in November 2023, for example. But there’s reason to believe they could start falling consistently shortly, possibly as soon as this August. 

Understanding this possibility, and being prepared for it, is critical for homebuyers engaged in today’s unique rate climate, as waiting for an ideal circumstance could lead to getting stuck with a worse rate. To that end, below we’ve gathered three potential ways mortgage interest rates could drop in the upcoming month.

Ready to buy a home? See what mortgage interest rate you could lock in here now.

3 ways mortgage interest rates could drop in August

Here are three potential scenarios – either combined or individually – that could result in lower mortgage interest rates this August.

The Fed could discuss a cut at their July meeting

While the likelihood of a reduction to the federal funds rate at the conclusion of the Fed’s next meeting on July 31 is low (under 5% according to the CME FedWatch tool), that doesn’t mean that rates still won’t fall on August 1. Depending on what the Fed announces after their meeting and what Federal Reserve chairman Jerome Powell says about the future of interest rates, lenders could adjust their offers to borrowers downward in anticipation of rate cuts to come. While this adjustment will be marginal to start, it could still lead to major savings when viewed through the prism of a 30-year mortgage loan. So borrowers should be prepared to lock in a rate around this time.

Start shopping for the best rates and lenders online today.

Inflation could fall again

The next inflation report is scheduled to be released on August 14 by the Bureau of Labor Statistics, detailing the inflation rate for July. And if that report is anything like the last three have been – all of which showed a drop in inflation – rates on borrowing products could start to fall as a result. It’s important to remember that mortgage rates change daily, accounting for a wide range of economic factors. So if the report on August 14 is an encouraging one, don’t be surprised to see rates decline on August 15.

Lenders can start preparing for a formal rate cut

While a formal reduction to the federal funds rate will ensure that mortgage rates drop, it doesn’t necessarily have to occur for lenders to begin offering lower rates. Rates have already dropped nearly a full percentage point since last year, as noted above, while the federal funds rate remained frozen. 

But if encouraging economic signs multiply in tandem with one another, lenders can and likely will start preparing for a formal rate cut in September by lowering rates in August. And with the CME FedWatch projecting a drop in the federal funds rate to a range between 5% and 5.25% then, rates on mortgage loans could easily drop in the month prior.

The bottom line

The long wait for mortgage rates to fall could soon be coming to an end in August. And while a formal rate cut appears more likely for September, developments in August could cause rates to start declining in anticipation. For now, borrowers should start shopping for lenders, improve their credit and understand all of their mortgage rate options (from adjustable-rate mortgages to mortgage points and more) so that they’re fully prepared to act when a low-rate opportunity finally presents itself again. 



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Former Trump national security adviser says next couple months are “really critical” for Ukraine

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Washington — Lt. Gen. H.R. McMaster, a former national security adviser to Donald Trump, said Sunday that the upcoming months will be “really critical” in determining the “next phase” of the war in Ukraine as the president-elect is expected to work to force a negotiated settlement when he enters office.

McMaster, a CBS News contributor, said on “Face the Nation with Margaret Brennan” that Russia and Ukraine are both incentivized to make “as many gains on the battlefield as they can before the new Trump administration comes in” as the two countries seek leverage in negotiations.

With an eye toward strengthening Ukraine’s standing before President-elect Donald Trump returns to office in the new year, the Biden administration agreed in recent days to provide anti-personnel land mines for use, while lifting restrictions on Ukraine’s use of U.S.-made longer range missiles to strike within Russian territory. The moves come as Ukraine marked more than 1,000 days since Russia’s invasion in February 2022. 

Meanwhile, many of Trump’s key selection for top posts in his administration — Rep. Mike Waltz for national security adviser and Sens. Marco Rubio for secretary of state and JD Vance for Vice President — haven’t been supportive of providing continued assistance to Ukraine, or have advocated for a negotiated end to the war.

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H.R. McMaster on “Face the Nation with Margaret Brennan,” Nov. 24, 2024.

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McMaster said the dynamic is “a real problem” and delivers a “psychological blow to the Ukrainians.”

“Ukrainians are struggling to generate the manpower that they need and to sustain their defensive efforts, and it’s important that they get the weapons they need and the training that they need, but also they have to have the confidence that they can prevail,” he said. “And any sort of messages that we might reduce our aid are quite damaging to them from a moral perspective.”

McMaster said he’s hopeful that Trump’s picks, and the president-elect himself, will “begin to see the quite obvious connections between the war in Ukraine and this axis of aggressors that are doing everything they can to tear down the existing international order.” He cited the North Korean soldiers fighting on European soil in the first major war in Europe since World War II, the efforts China is taking to “sustain Russia’s war-making machine,” and the drones and missiles Iran has provided as part of the broader picture.

“So I think what’s happened is so many people have taken such a myopic view of Ukraine, and they’ve misunderstood Putin’s intentions and how consequential the war is to our interests across the world,” McMaster said. 

On Trump’s selections for top national security and defense posts, McMaster stressed the importance of the Senate’s advice and consent role in making sure “the best people are in those positions.”

McMaster outlined that based on his experience, Trump listens to advice and learns from those around him. And he argued that the nominees for director of national intelligence and defense secretary should be asked key questions like how they will “reconcile peace through strength,” and what they think “motivates, drives and constrains” Russian President Vladimir Putin.

Trump has tapped former Rep. Tulsi Gabbard to be director of national intelligence, who has been criticized for her views on Russia and other U.S. adversaries. McMaster said Sunday that Gabbard has a “fundamental misunderstanding” about what motivates Putin.

More broadly, McMaster said he “can’t understand” the Republicans who “tend to parrot Vladimir Putin’s talking points,” saying “they’ve got to disabuse themselves of this strange affection for Vladimir Putin.” 

Meanwhile, when asked about Trump’s recent selection of Sebastian Gorka as senior director for counterterrorism and deputy assistant to the president, McMaster said he doesn’t think Gorka is a good person to advise the president-elect on national security. But he noted that “the president, others who are working with him, will probably determine that pretty quickly.”



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Sen. Van Hollen says Biden is “not fully complying with American law” on Israeli arms shipments

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Sen. Van Hollen says Biden is “not fully complying with American law” on Israeli arms shipments – CBS News


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Democratic Sen. Chris Van Hollen of Maryland, who last week backed Sen. Bernie Sanders’ bill to block U.S. sending arms to Israel, told “Face the Nation with Margaret Brennan” that President Biden ” is not fully complying with American law” on sending arms to Israel.

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Rep.-elect Sarah McBride says “I didn’t run” for Congrees “to talk about what bathroom I use”

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Rep.-elect Sarah McBride says “I didn’t run” for Congrees “to talk about what bathroom I use” – CBS News


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Rep.-elect Sarah McBride, the first openly transgender person to be elected to Congress, tells “Face the Nation with Margaret Brennan” that as Republicans have sought to put forward a bathroom ban in the Capitol, she “didn’t run for the United States House of Representatives to talk about what bathroom I use.”

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