Mortgage rates today, Sep. 2, and rate forecast for next week

Today’s mortgage rates

Average mortgage rates barely moved yesterday. But, finally, I can report a week during which they fell significantly. You have to go back to the second week in August to find them lower.

The next seven days are slow ones for economic reports. And I’m hoping mortgage rates may hardly move next week. But that’s an uncertain prediction during a time like this when markets seem to be driven by sentiment almost as much as by data.

Next Monday is Labor Day. Lenders should be shut, mortgage rates should be unchanged and this daily report won't appear. But we'll be back on Tuesday.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

I concur with The New York Times (paywall), which reported this week: “Economists predict that mortgage rates will remain elevated for at least a few more months.”

So, my personal rate lock recommendations remain:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• LOCK if closing in 30 days
• LOCK if closing in 45 days
• LOCK if closing in 60 days

However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.

What’s moving current mortgage rates

For many months, most economists were predicting a recession in response to the Federal Reserve’s rate hikes. And I agreed with them.

But, more recently, those predictions have faded away. As the lead story in today’s Wall Street Journal (paywall) suggests:

“Steady hiring and robust consumer spending offer the latest evidence that the pandemic’s effects and the government’s unprecedented policy responses made the economy surprisingly resilient to the Fed’s most aggressive interest-rate increases in 40 years.

“Employers added 3.1 million jobs over the past 12 months, including 187,000 in August, the Labor Department said Friday. The unemployment rate rose to 3.8% from 3.5% in July as more Americans joined the workforce.”

Unfortunately for us, a recession was our best hope for a sustained and significant fall in mortgage rates. And that prospect has receded, at least for now.

Eventually, mortgage rates will fall. They always do. But I’d be surprised if we were to see a new downward trend for some months.

Next week

Last week brought three highly important reports for mortgage rates. Next week brings none.

There are two that occasionally move mortgage rates, but rarely far. They land on Wednesday and are both purchasing managers’ indexes (PMIs), which are pretty good indicators of economic activity in different sectors. Both this week’s are for the services sector in August, one from S&P and the other from the Insitute of Supply Management (ISM).

Several senior Federal Reserve officials have speaking engagements next week. A whopping six are due to speak on Thursday and one on Friday.

And markets will be keen to hear how they think last week’s economic data might have affected the likelihood of a further rate hike on Sep. 20. So, what they say could affect mortgage rates.

Economic reports next week

Read the previous section for the economic reports and events most likely to move mortgage rates. But I’m hoping they won’t move far off their current, relatively low levels.

In the following list of next week’s reports, only those in bold are likely to affect mortgage rates much. The others probably won’t have much impact unless they contain shockingly good or bad data.

• Monday — Labor Day holiday so no reports or events. Markets closed
• Wednesday — August PMIs from S&P and the ISM
• Thursday — Productivity and unit labor costs for the second quarter. And six speeches from top Fed officials. Plus new jobless claims for the week ending Sep. 2
• Friday — Further speech from one top Fed official

Here’s hoping next week will be a quiet one for mortgage rates.

Time to make a move? Let us find the right mortgage for you

Mortgage rates forecast for next week

There’s a good chance that mortgage rates will barely move next week. But there’s always a risk of something unexpected arising that ruins such predictions.

How your mortgage interest rate is determined

Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.

And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.

Your part

But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:

1. Shopping around for your best mortgage rate — They vary widely from lender to lender
2. Boosting your credit score — Even a small bump can make a big difference to your rate and payments
3. Saving the biggest down payment you can — Lenders like you to have real skin in this game
4. Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
5. Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?

Time spent getting these ducks in a row can see you winning lower rates.

Remember, they’re not just a mortgage rate

Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on your “PITI.” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.

Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.

But there are other potential costs. So, you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!

Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that rate higher than your straight mortgage rate.

But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:

Down payment assistance programs in every state for 2023

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.