The Mortgage Outlook for September

Holden Lewis, NerdWallet’s mortgage and real estate expert, predicts mortgage rates will rise modestly during the first half of September and then level off.

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 Federal Reserve’s July 27-28 meeting, Fed policymakers started talking about the timetable for reducing the amount of money the central bank adds to the banking system.

This forecast will be wrong if the toll from COVID-19 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.

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