Overall, the mortgage rate forecast for September is positive, with rates continuing to fall, though some factors could slow the downward projection and even cause rates to rise slightly. As the Federal Reserve held it’s monthly meeting last week, 30-year fixed-rate mortgages were at 2.977% and 15-year fixed-rate mortgages remained at 2.541%.
Here are three things you should know for the rest of September and the beginning of October.
What is the Mortgage Rate Forecast for the rest of September?
Over the past several months, we have seen mortgage rates repeatedly fall to record lows. The question is, will this trend continue into October? It is possible.
Be aware, however, that several factors could reduce the downward trend, and even reverse it. Here are a few of the factors to keep an eye on:
- An increase in home sales
- The continued effects of COVID-19
Home Sales Might Be Through the Roof
For many, the pandemic and recession have been a real hardship. Some have been out of work for months. Others have not been as severely affected. Those who have not faced the loss of a job or other financial strains have benefitted from the low mortgage interest rates that we have been seeing for most of the year.
While stay-at-home orders caused a slump in home sales during the spring and early summer, the rebound we saw in July and August has led some to predict that a sharp increase in home sales could drive the mortgage rates up. The mortgage rate forecast for the rest of September and into October could see the first effects of this increase.
New COVID-19 Fees
Many homeowners who have been affected by the COVID-19 pandemic have sought relief from paying some or all of their mortgage payment in the past few months. Mortgage forbearances are costly for lenders, especially Fannie Mae and Freddie Mac, which buy about half of mortgages.
Because forbearances have the possibility of turning into foreclosures, which would make Fannie and Freddie responsible for covering the principal and interest, the Federal Housing Finance Agency ordered an “adverse market refinance fee” to cover costs.
The reason this fee could cause rates to rise is that lenders don’t want to dissuade their borrowers with a large closing cost. Instead, they may choose to raise rates.
Stay Up to Date on the Mortgage Rate Forecast with the Latest Tools
While none of these factors are guaranteed to cause mortgage rates to rise, they contribute to the overall climate of the mortgage industry. The trend for the coming weeks may be an increase in rates, but if the reversal does happen, it won’t be a drastic increase.
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