Rates Hit a 1-Year High, Then Everything Changed | July Market Update

Inside of 48 hours in July, mortgage rates touched a one-year high, inflation posted its biggest drop since 2020, and a new California housing law was signed. Here is what I covered.

Rates first. They touched a one-year high just under 6 3/4. Then the June inflation report landed and prices actually fell for the month, the biggest one-month drop since 2020. Mortgage bonds rallied and rates eased off the high, though they are still volatile. I put them in the mid to high sixes, which was still about a quarter point better than a year earlier. The big Fed question is whether they cut, and the data was saying a hike was more likely than a cut. For refinance planning, here is rough math: about $300 a month per point on a $500,000 loan. Get your target number on file with me or any lender so you are ready to lock. We have a lock alert program that tells you the day a refinance makes financial sense.

California housing. On July 13, 2026 the governor signed a housing budget bill, AB 179. Most of it is plumbing for affordable housing funding, but it encourages cities to cut or waive impact fees on state-funded affordable projects, and it creates a disaster rebuilding fund. Separately, a statewide housing bond that includes money for the CalVet home loan program was placed on the November 2026 ballot.

ADUs came up all the time, so here is what I shared. These rules come from separate ADU laws that took effect January 1, 2026, not from AB 179. Your city now has 15 business days to tell you whether your ADU application is complete, and if it misses that deadline, the application is deemed complete and the approval clock starts. An ADU or junior ADU with less than 500 square feet of living space no longer pays school district fees. A junior ADU with its own bathroom no longer requires the owner to live on the property, so it can be a rental even if you move away, for long-term tenants rather than short-term vacation stays. And the money part: starting this year, conventional loans can count rent from an ADU on a one-unit home as qualifying income. There are limits, including a cap of 30% of your qualifying income, and it depends on the person, but it is real and we are talking to people about it.

A few more things. Trigger leads, those spam calls and texts after you apply, are now restricted by federal law. The Homebuyers Privacy Protection Act took effect March 5, 2026, and the credit bureaus can now sell those leads only in narrow cases, such as when you opt in or already do business with the company. The credit system is getting a real update, with scoring models that mean we do not have to depend only on FICO, which helps first-time buyers and people building credit. Mortgage insurance premiums are deductible again starting with the 2026 tax year if you itemize, so ask your CPA. And VA launched its Partial Claim Program on June 15, 2026 for veterans who fell behind on a VA loan. After a trial payment plan, the missed payments can move into a separate balance at 0% that is repaid when you sell, refinance or pay off the loan, instead of heading toward foreclosure. Servicers have until November 28, 2026 to offer it, so ask yours.

On the market, nationally buyers were having their best summer in years, with sellers paying closing costs. In Shasta County it was the opposite, with homes moving in about 2 weeks.

If you are in Redding and thinking about a refinance, an ADU, or your next purchase, start with refinance or get your rate. MortgageOne is now licensed in 49 states.