Mortgage rates today, Sep. 16, and rate forecast for next week

Today’s mortgage rates

Average mortgage rates nudged upward again yesterday. And they ended the week moderately higher than they started it.

I’m hoping that mortgage rates might hold steady or dip a bit next week. That’s because it’s looking highly likely that the Federal Reserve will pause its hikes of general interest rates when it announces its next move on Wednesday. However, the Fed could still push rates higher if it adopts a hawkish tone that day.

Current mortgage and refinance rates

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Should you lock a mortgage rate today?

Of course, there’s a possibility of a new, sustained downward trend in mortgage rates over the next three or four months. But I rate it unlikely.

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

We should take mortgage rates only nudging higher this week as a win. Over the last seven days, economic data have been unfriendly to us.

We saw inflation higher and the economy performing better than expected. And I’m surprised mortgage rates aren’t higher today.

The Fed next week

Next week’s big event is due on Wednesday. That’s the day the Federal Reserve announces whether it will hike general interest rates.

Right now, that’s looking unlikely, which could be good for mortgage rates. The CME FedWatch tool gauges the likelihood of future rate increases based on 30-day Fed Funds futures pricing. And it puts the chances of no change at a whopping 98%.

However, even if the Fed holds its rates steady, that doesn’t guarantee an easy day for mortgage rates.

Wednesday’s 2 p.m. (ET) announcement will come with a “dot plot,” which is formally called a Summary of Economic Projections. It allows each Fed decision-maker to forecast how he or she sees general interest rates moving over the foreseeable future. Those forecasts are then compiled and presented in a graphic.

If the dot plot shows a consensus expectation that general rates will rise again over the next few months, that could be bad for mortgage rates. But, if a majority foresees no more hikes and a start to cuts in the middle of next year, mortgage rates might tumble.

As dangerous for mortgage rates is a news conference hosted by Fed Chair Jerome Powell. That’s scheduled for 30 minutes after Wednesday afternoon’s announcement.

And investors will be highly sensitive to Mr. Powell’s message and tone. Again, we’re looking at falling mortgage rates if he’s positive (no more hikes and cuts mid-2024) and rising ones if he’s negative.

Three Fed decision-makers are due to speak next Friday. And they have a chance to clarify any misunderstandings arising from Wednesday’s events. So, markets will be watching those, too.

The rest of next week

Ironically, housing data rarely affect mortgage rates much. And next week is dominated by such reports.

However, there are a couple of other economic reports scheduled for Friday. And those have the potential to move those rates, normally moderately.

They’re early readings of September purchasing managers’ indexes (PMIs) from S&P, one for the services sector and another for the manufacturing sector.

Purchasing managers are exceptionally well-placed to gauge coming economic activity in their sectors. So, investors often take these PMIs seriously. Analysts (specialist economists) are expecting both indexes to show the economy strengthening.

Economic reports next week

Fed Wednesday is most likely to see mortgage rates moving up and down. But Friday’s PMIs might also bring some changes. Read the previous section for details.

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 — Home builder confidence index for September
• Tuesday — August housing starts and building permits
• Wednesday — Fed interest rate decision. With dot plot and press conference
• Thursday — August existing home sales. Plus that month’s leading economic indicators. And new jobless claims for the week ending Sep. 16
• Friday — September PMIs from S&P. Plus three senior Fed officials’ speaking engagements

Watch out for Wednesday! And be aware that mortgage rates can move for reasons other than economic data and the Fed.

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

Mortgage rates forecast for next week

If things go well with the Fed on Wednesday, mortgage rates could be close to unchanged or fall next week. But that’s a big if.

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.