Mortgage Outlook: A Light Lift to September Rates
This article was first published on NerdWallet.com.
September mortgage rates forecast
The interest rate on the most popular mortgage has fallen to record lows for three months in a row. That streak might snap in September.
The 30-year fixed-rate mortgage averaged 3.08% in August, down from the average of 3.18% in July and 3.33% in June. Fixed mortgage rates have fallen more than three-quarters of a percentage point in a year, motivating many homeowners to refinance.
It's possible that mortgage rates will continue to drift downward in September, but several forces could combine to halt the slow-motion slide and maybe cause them to rise:
- A sizzling pace of home sales.
- The Federal Reserve's friendly wave to higher inflation.
- The risks that lenders face because of the recession.
Let's step through the effects these three factors could have on mortgage rates.
Home sales are staging a comeback
The COVID-19 economy has affected Americans unequally. Millions of workers have lost their jobs, temporarily or permanently, and July's unemployment rate was 10.2%. But low mortgage rates have accompanied the recession. And record-low rates make homes more affordable for people who can qualify for mortgages: those who didn't lose their incomes and were able to keep paying their bills on time.
Those people have been on a homebuying spree. Stay-at-home orders led to a dip in home sales in spring, followed by a rebound in summer. In July, 78,000 new homes were sold, the biggest month since...