PCE Holds at 3.7%: What It Means for California Mortgage Rates

Inflation held flat in July, keeping the Fed's next move uncertain — and that uncertainty is already showing up in mortgage rates. Here's what California buyers and refinancers need to know.

The Fed's go-to inflation gauge — the PCE index — came in at 3.7% for July, unchanged from the previous month. On the surface, that sounds like good news. But for anyone waiting on lower mortgage rates, flat inflation means the Fed has little reason to start cutting just yet.

As a result, the 30-year conforming mortgage rate climbed to 6.78% for the week ending August 21, a three-week high. Mortgage application volume dropped in response, as higher rates pushed some buyers and refinancers to the sidelines.

Here's my take: this is not the time to play a waiting game. Rates could drift higher if upcoming economic data surprises to the upside. California home prices remain competitive, and inventory — while improved — is still limited in most major markets. Buyers who lock in now avoid the risk of rates climbing further.

For those considering a refinance, a rate-and-term refi may not pencil out today, but a cash-out refi for home improvements or debt consolidation could still make strong financial sense depending on your current rate and equity position.

The Fed's September decision is still up in the air. Don't let uncertainty paralyze your plans. Reach out to our team today and let's run the numbers for your specific situation.