Will Mortgage Rates Increase iIn September 2023?
While some point to the 7% interest rate zone as a sign to wait, others look at the current rates and wonder if they shouldn’t lock in a rate now before they go even higher. Will home loan interest rates go higher in September 2023?
Home Loan Interest Rate Trends in the Last Months of 2023
CBS News reminds us that home loan interest rates are associated with the Federal Funds Rate, which the Fed has been increasing to fight inflation since March 2022.
There was a pause in the rate hikes during the summer, but a recent speech by the Federal Reserve Chairperson indicates more rate hikes are on the way.
Jerome Powell, head of the Federal Reserve, notes that inflation has a way to go before rate hikes may be off the table. A CBS News report from August 30, 2023, notes, “experts we spoke to recently largely agreed a rate hike in September is likely. If this is the case, mortgage rates will go higher, too.”
Commit Now, Save Later?
That is one reason some borrowers are keen on locking in a mortgage loan interest rate NOW, to be protected against future rate increases. Interest rate locks are a commitment between the borrower and the lender, but they have a limited lifespan and feature an expiration date.
If your loan does not close before the rate lock agreement expires, you may have to renegotiate with your lender. Rate locks can cost money, so people typically don’t rush into them before it’s the right time.
A typical rate lock agreement may last between 30 and 60 days, but you can try negotiating a longer commitment from the lender.
Buying With High Rates
There’s a lot of talk about purchasing now and refinancing later when rates dip below the 7% zone again.
The key is to get into a loan that can help you do that with as little hassle as possible. FHA mortgage options include an FHA streamline refinance loan, which has no FHA-required appraisal or credit check.
Those with FHA mortgages with rates in the 7% range can think about an FHA streamline refi option once rates have dropped below where they are now.
The streamline refinance loan typically requires some benefit to the borrower, such as lower monthly payments or a lower rate.
However, the going rate for these refinance loans must be lower than the original rate for the borrower to get the benefit, which is why FHA streamline loans aren’t in favor right now.
Once refinance loan interest rates are low enough, FHA borrowers who bought in 2023 should consider their options under the FHA streamline program.
Annual Income Requirements for FHA Loans
Good Credit History Helps Get FHA Loans
Stay Informed About Your Mortgage Closing Costs
Do you know what's on your credit report?
Learn what your score means.