Rates Hit a 52-Week High. If You Need Cash, Do Not Touch Your 3% Mortgage
The average top-tier 30-year fixed rate is 6.89% per Mortgage News Daily, two hundredths below the 52-week high of 6.91% set earlier in the week. Friday's jobs report came in far stronger than expected and rates barely flinched, which tells you the bad news was already priced in. If you are buying, the payment math is what it is and I run it below. If you already own and your rate starts with a 2 or a 3, this week is a reminder of the most expensive mistake in mortgage lending right now: refinancing a cheap first mortgage just to get at your equity.
A strong jobs report, and a market that shrugged
The August jobs report landed Friday morning: 162,000 new jobs against a median forecast of roughly 56,000, with unemployment holding at 4.1%. A beat that size used to send mortgage rates sharply higher within hours. This time the 30-year average rose one hundredth of a point, partly because the job count carries less weight than it used to, and partly because rates had already climbed to the top of their range by Wednesday. The damage was done before the report printed.
The trend is the bigger story. The 30-year fixed has gone from 6.77% two weeks ago to 6.81% last Monday to 6.89% now, and Freddie Mac's weekly survey, which lags the daily index, rose to 6.71%. That is an observation about where rates are, not a forecast of where they go next. I do not make rate predictions.
What 6.89% means if you are buying
Here is a $500,000 loan, principal and interest only, 30-year term:
- At the 6.89% national average, the payment is about $3,290 a month.
- At 6.500%, the conventional rate posted today on my live rates page, it is about $3,160.
- That is roughly $130 a month, about $1,560 a year, on the same house, from shopping the rate instead of taking the average.
FHA and VA averages are still well under conventional at 6.44% and 6.46%, the same gap I wrote about last week, so if either program fits you, price it.
The homeowner trap: cashing out a 3% mortgage at today's rates
A huge share of homeowners are sitting on rates in the 2s and 3s from 2020 and 2021, and no lender will ever hand you one of those again. So when someone with a 3.25% mortgage calls me about a cash-out refinance for a remodel, tuition, or paying off credit cards, the first thing I do is show them what they would be giving up. Cash-out refinances also price above plain purchase rates, which makes the gap even wider.
Say you took a $450,000 loan in September 2021 at 3.25%. Your principal and interest payment is about $1,958, and after five years of payments you owe about $402,000. You need $75,000. Two ways to get it:
- Option A, cash-out refinance. New loan of $477,000 at 6.750%, the cash-out rate posted today on my rates page. New payment about $3,094, an increase of $1,135 a month, and the clock resets to 30 years on the entire balance.
- Option B, keep the first mortgage. Leave the 3.25% loan exactly as it is and add a $75,000 fixed-rate second mortgage at 6.875%, the best-tier second-lien rate posted today, amortized over 30 years. That payment is about $493. Total for both loans: about $2,451.
- The difference is about $643 a month, roughly $7,700 a year, for the same $75,000 in hand. Your blended rate across both loans stays under 4%.
The caveats. Second-lien pricing moves with your credit score and how much total equity you are borrowing against, so 6.875% is the best tier, not a promise. A HELOC is usually variable and interest-only during the draw period, so if you want payment certainty, ask for the fixed second. Both options carry closing costs. And if your first mortgage is already in the high 6s or 7s because you bought in 2023 or 2024, a cash-out refinance can make sense, especially if it consolidates other debt. Run both. My HELOC and home equity page prices a second lien against a full refinance side by side, and the HELOC vs cash-out guide walks through the decision in plain English.
A note for Texas homeowners
Texas writes its home equity rules into the state constitution, and they apply whether you cash out through a refinance, a home equity loan, or a HELOC: total borrowing against your home is capped at 80% of its value, there is a mandatory 12-day waiting period after you apply, and the loan has to close at a title company, lender office, or attorney's office. The keep-your-first-mortgage strategy still works in Texas, it just runs through a narrower door. My Texas page covers the rules in more detail.
Have a low rate and need cash?
Send me your balance, your rate, and how much you need. I will price a fixed second, a HELOC, and a cash-out refi side by side. No credit pull, no pressure, usually same day.
What is on the calendar this week
Markets are closed Monday for Labor Day. Producer prices come Thursday, and the big one, the August Consumer Price Index, prints Friday, September 11. That is the last inflation report before the Fed meets on September 16, and inflation is the number the Fed chair said he is watching, so Friday carries more weight than a normal CPI day. A cool reading has historically helped rates and a hot one has hurt them, but these reports surprise in both directions and I will not pretend to know which way this one breaks.
If you are floating with a closing inside 30 days, the framework from two weeks ago still applies, only now from the top of the range: a rate you can afford beats a rate you might get. If you are a homeowner weighing a cash-out, nothing on this week's calendar changes the answer. The gap between your old rate and any new first mortgage is the whole story.
The bottom line
The 30-year fixed is at 6.89%, the top of its 52-week range, and a strong jobs report did not push it higher. Buyers: shop the rate, because the gap between the national average and what I am posting is about $130 a month on a $500,000 loan. Owners with a low rate who need cash: do not give that rate up to get it. A second mortgage leaves your first loan alone and, in the example above, saves about $643 a month over a cash-out refinance. Check the live rate I am posting today, run your own numbers on the HELOC and home equity page, and if you want a straight answer on your situation, my phone number is at the top of the page and I answer it personally. If you would rather watch and wait, join the free rate alert list and I will email you when the market moves enough to change your math.