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Mortgage rates this week
Mortgage rates rose across the board in the week ending Sept. 28, and the 30-year fixed rate saw its largest week-over-week jump since April.
The 30-year fixed-rate mortgage averaged 7.46% APR, up 26 basis points from the previous week's average.
The 15-year fixed-rate mortgage averaged 6.69% APR, up 19 basis points from the previous week's average.
The 5-year adjustable-rate mortgage averaged 8.13% APR, up seven basis points from the previous week's average.
Sales of existing homes dipped slightly overall in August, but have not seen meaningful swings in months, according to the National Association of Realtors. Sales dropped in the South and West. They remained steady in the Northeast and inched up in the Midwest.
An eye-catching detail from the NAR’s latest report is a comment made by chief economist Lawrence Yun, who remarked on continued home price increases. "Supply needs to essentially double to moderate home price gains," he said. The median existing-home price was $407,100 in August 2023, up 3.9% from $391,700 in August 2022.
Meanwhile, average hourly earnings increased only 0.5% from August 2022 to August 2023, according to the Bureau of Labor Statistics. Even if interest rates hadn’t gone up at all in that period — excuse a wistful sigh at the thought — today’s average buyer would still be devoting a larger portion of their monthly income to making mortgage payments than they would have last year. Until we see some kind of serious growth in the number of houses for sale, sellers are sitting on rare commodities that will command palace prices.
Prospective buyers should hope that traditional seasonal trends apply, which would mean that this year’s home prices peaked in the summer and may soon begin to fall slightly (or at least level off) now that autumn is officially upon us. Borrowers can improve their chances of getting the best rate offers by polishing their credit scores, paying down credit balances and saving for a larger down payment.
» MORE: Tips for first-time home buyers
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September mortgage rates forecast
Mortgage rates might rise in September, for the fifth month in a row, because of uncertainty about what the Federal Reserve will do in coming months.
The Fed is cultivating ambiguity about its course of action — a deliberate policy choice that shores up a floor under mortgage rates. Someday, after the central bank signals its intentions clearly, mortgage rates will drop. But that almost certainly won't happen in September.
What other forecasters say
Fannie Mae, the Mortgage Bankers Association and National Association of Realtors expect that mortgage rates will trend downward in the quarters ahead.
Mark Fleming, chief economist for First American Financial Corp., predicts a higher floor than the above three forecasters, because economic and geopolitical uncertainty will keep rates higher. "A likely scenario is that mortgage rates continue to hover in the 6.5-to-7.5 percent range for the remainder of the year, which means affordability will remain a challenge for many home buyers," he wrote in a blog post.
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