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On Thursday, September 23, 2021, the average interest rate on a 30-year fixed-rate mortgage dropped five basis points to 2.854% APR. The average rate on a 15-year fixed-rate mortgage also dropped five points to 2.115% APR and the average rate on a 5/1 adjustable-rate stayed the same at 3.198% APR, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is four basis points lower than one week ago and 14 basis points lower than one year ago. A basis point is one one-hundredth of one percent. Rates are expressed as an annual percentage rate, or APR.
changed minimally in the week ending Sept. 23. Though the 30-year fixed rate rose three basis points, it's still well below 3%.
This week, the National Association of Realtors announced that sales of existing homes fell 2% in August after two months of gains. NAR Chief Economist Lawrence Yun speculates that rising home prices are to blame for the drop. The inventory of unsold homes remains low, and housing prices continue to increase.
In August, homes sold for a median price of $356,700, according to NAR data. That's $3,200 lower than in July, but that less-than-1% dip barely puts a dent in year-over-year trends. August 2021's median price rose 14.9% from August 2020 — and 28.2% from August 2019. Even adjusting for inflation, the median price would be $60,056 higher in August 2021 compared with August 2019.
While low rates can help stretch your homebuying budget by shrinking the monthly mortgage payment, they can only get you so far when prices are this high. Hopeful buyers who don’t hold fast to their upper limits when making an offer may risk ending up . It’s hard to play it safe in a market where homeownership can feel just out of reach, but doing just that could help you avoid buyer's remorse over what's likely the largest purchase of your life.
Mortgage rates went up about an eighth of a percentage point in August, and I think they'll continue to rise modestly in the first half of September, then level out.
The roots of this prediction stretch all the way back to March. Rates went up sharply that month as COVID-19 vaccines rolled out and we were optimistic that the disease would soon get under control and the U.S. economy would boom. But mortgage rates fell from April through July, with peaks and valleys.
The rate on the 30-year fixed-rate mortgage bottomed out in early August at 2.77% APR. Then, it started rising, hitting 2.98% in the last full week of the month.
That's because, after the , Fed policymakers started talking about the timetable for reducing the amount of money the central bank adds to the banking system.
The Fed has been buying $80 billion in government debt and $40 billion in mortgage debt each month. The money stimulates the economy by pushing down on interest rates.
Eventually, the Fed will end these purchases. In August, mortgage rates went up merely because Fed policymakers publicly discussed how and when the purchases will end.
My prediction assumes pundits will speculate about this timetable for the first three weeks of September and mortgage rates will trend upward. I think the Fed will announce the aforementioned timetable at its monetary policy meeting that concludes Sept. 22. That's when mortgage rates will level off.
This forecast will be wrong if the gets a lot worse, enfeebling the economy; in that case, mortgage rates might drop.
If I'm misreading the Fed and it doesn't announce a timetable Sept. 22, and instead delays an announcement until a later meeting, mortgage rates might fall afterward.
It's also possible that mortgage rates already completed their pre-Fed climb in August and will be steady through most of September.
Finally, instead of announcing a timetable for cutting back on debt purchases later in autumn, the Fed could actually start the process soon after the September meeting. Such a surprising announcement could result in an abrupt rise in mortgage rates.
At the beginning of August, I said rates were "more likely to edge down than to go up," and that the 30-year fixed would dip to 2.75% APR at some point. Wrong on both counts. I predicted that the monthly average on the 30-year mortgage would be between 2.8% and 2.9%, and it ended up at the upper end of that range.
The COVID-19 pandemic did worsen in much of the U.S. during August, as I expected. Absent other factors, an accelerating epidemic would push mortgage rates lower. But the Fed's talk about reducing debt purchases pressed rates upward and turned out to be a stronger opposing force.