Holden Lewis, a mortgage and real estate expert at NerdWallet, predicts that mortgage rates will rise slightly in the first half of September and then level off.
The roots of this prediction go back to March. The rates rose sharply in the month that COVID-19 vaccines were launched, and we were optimistic that the disease would soon be under control and the US economy would grow exponentially. But mortgage rates fell from April to July, with peaks and valleys.
The rate on 30-year fixed-rate mortgages hit a low in early August at 2.77% per annum. It then began to rally, reaching 2.98% in the last full week of the month.
This is because after the July 27-28 meeting of the Federal Reserve System, Fed officials began talking about a schedule to cut the amount of money the central bank is adding to the banking system.
This prediction will be wrong if the impact of COVID-19 gets much worse, weakening the economy; in this case, mortgage rates may fall. If I misunderstand the Fed and it does not announce the September 22 schedule, but instead postpones the announcement until a later meeting, mortgage rates could fall after that.
It is also possible that mortgage rates have already completed their rise prior to the Fed’s introduction in August and will remain stable for most of September. Finally, instead of announcing a timetable for cutting debt purchases in late fall, the Fed could actually start the process shortly after the September meeting. Such an unexpected announcement could lead to a sharp rise in mortgage rates.