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Will Rates Go Down in September 2023? | Rates Forecast

By: Paul Centopani

August 17, 2023
Will Rates Go Down in September 2023? | Rates Forecast (themortgagereports.com)

Mortgage rates fluctuated significantly to open 2023. In the first half, the average 30-year fixed rate went as low as 6.09% on Feb. 2 and climbed up to 6.79% on June 1, according to Freddie Mac.

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The range can be largely attributed to the Federal Reserve’s ongoing fight against inflation, juxtaposed with uncertainty in the banking sector sparked by Silicon Valley Bank’s collapse. However, with duress permeating the financial market and the fallout from U.S. debt ceiling talks, the Fed may continue making hikes to bring interest rates down.

With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.

Experts from First American, CJ Patrick Company, Realtor.com, and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in September.

Expert mortgage rate predictions for September

Ralph DiBugnara, president at Home Qualified

Prediction: Rates will moderate

“The Fed finally seems to be signaling that we have reached a level, with interest rate raises, that they feel is having the impact they intended the raises to have. Inflation, in most sectors, has started to decrease or stabilize. According to the Consumer Price Index (CPI) the only sector that was truly up over the last few months is real estate.

This is mostly because of a large inventory shortage nationwide. With all of these factors I see interest rates overall staying steady at their current levels through September. The 30-year fixed rate will settle at around 7% average for the month of September and the 15-year fixed rate will land at 6.375%.”

Jess Kennedy, co-founder and COO at Beeline

Prediction: Rates will moderate

“There is a lot in the news about the almost unexpected strength of the overall US economy. On the back of this, we have seen rates push higher. As these newest reports become reality, we expect rates to stay steady if not slightly decline in September. This is assuming the Fed decides not to increase rates at their next meeting, which appears to be the current sentiment.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will fall

“Fed policy, inflation, and the health of the labor market determine the outlook for inflation in September. According to the CME FedWatch tool, the odds that the Federal Reserve will pause rate hikes are nearly 90%. If inflation deceleration and labor market cooling continue and the Fed decides to pause rate hikes, there may be some downward pressure on mortgage rates.

The Fed is also expected to release their dot plot projections during the September FOMC meeting. If inflation expectations are higher than expected or the Fed has to take more drastic actions than markets anticipate to tame inflation, mortgage rates may move up.”

Jessica Lautz, deputy chief economist at National Association of Realtors

Prediction: Rates will fall

“In the coming months, with inflation easing, one hopes the Fed will stop rate increases to the federal funds rate, which will lower mortgage interest rates in the fall and winter. In the short term, this is bad news for consumers looking to enter the late summer housing market. Affordability challenges will continue for buyers if new inventory is not brought to the market and rates do not abate.

The increased mortgage rate is exacerbating housing affordability as home prices are climbing in this limited inventory environment. Something has to give for rates to come down, and that something is the next decision by the Fed.”

Rick Sharga, president and CEO at CJ Patrick Company

Prediction: Rates will moderate

“Mortgage rates, after ranging between 6.5% and 7.0% for the past three months, have risen a bit more than expected in August, due in part to yields on the 10-year U.S. Treasury reaching their highest point this year. The bond market — and the mortgage market — seem to be reacting to a relatively hawkish posture by the Federal Reserve, suggesting that the Fed Funds rate may tick up higher and then stay at that elevated level for longer than many analysts expected.

Given these higher yields on the 10-year bonds and the uncertainty surrounding the Fed’s direction, it seems likely that mortgage rates will stay between 7.0% and 7.25% through the first half of September, and then adjust up or down after the Fed meets on the 19th and indicates what its plans are.”

Jiayi Xu, economist at Realtor.com

Prediction: Rates will moderate

“Mortgage rates will likely maintain their current level of approximately 7%. A sticky inflation rate combined with a declining unemployment rate implies that the Fed is very unlikely to cut the rate anytime soon. Meanwhile, it is worth noting that the Fed is proceeding with caution to make sure lagged effects of previous rate hikes are fully revealed.

As the CPI shelter index, the largest contributor to the inflation growth, has passed its peak and has been on a downward trajectory since April, we may expect a faster inflation slowdown in the coming months. Therefore, it will not be surprising to see the Fed take another “wait-and-see” approach during the upcoming FOMC meeting, which may help alleviate the recent rise in mortgage rates.”

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