Will mortgage interest rates go up in November?
After some signs that inflation was cooling earlier this year, it rose in July and August and remained unchanged in September. While not as high as earlier in 2023, persistent inflation is still a problem to be dealt with, particularly as the 3.7% rate it currently sits at is substantially higher than the Federal Reserve's 2% target goal. And with elevated inflation comes elevated interest rates.
The benchmark interest rate currently sits at a range between 5.25% and 5.50% — a 22-year high — and could go even higher in the weeks to come. While this has resulted in substantial returns on some savings accounts, it's also made borrowing more expensive. This is particularly felt by homebuyers who are now contending with the highest mortgage interest rates since 2000. That said, rates could go even higher in the weeks to come, possibly making now the last time to get a decent rate.
See what mortgage interest rates you could qualify for here now.
Will mortgage interest rates go up in November?
The Federal Reserve has already implied that another rate hike is coming this year. And with just two and a half months left until 2024, it could be announced following their October 31-November 1 meeting.
"We are attentive to signs that the economy may not be cooling as expected," Fed chair Jerome Powell said in August. "We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective."
Considering that those comments were made before the September inflation report was released, it's almost a certainty that the benchmark interest rate — and the corresponding rates on mortgages, personal loans, credit cards and more — will follow with it. So the 7.89% average mortgage rate for a 30-year loan available today is likely to creep up even further in the weeks to come, possibly as soon as November.
"It's always a nearly impossible task to predict mortgage rate movements, but there's no clear reason to expect a sizable drop in the near future," Nicole Bachaud, senior economist at Zillow, recently told CBS News.
If you're looking to purchase a home in today's elevated-rate environment, then it may help to shop around to find the lowest mortgage interest rate possible. Get started here now.
How to get a below-average mortgage interest rate now
Even with mortgage rates higher than most buyers would like, there are some ways to get a below-average rate. Here are two of the more popular options:
Buy mortgage points
Homebuyers searching for a more affordable loan should speak to their lender about potentially buying mortgage points. Mortgage points essentially act as a fee that buyers can pay to the lender to lock in a slightly lower rate than they otherwise would have secured on their own. While this won't dramatically lower the available rate, every dollar counts, particularly now.
Just make sure to remain in the home long enough to recuperate the costs of paying for the points. Otherwise, it may not be valuable for you.
Consider an adjustable-rate mortgage
An adjustable-rate mortgage is not an option many experts would recommend in a regular rate environment. But the rate environment of October 2023 isn't what many would consider to be normal, either. An adjustable-rate mortgage involves securing a slightly lower rate now with the understanding that it can and will adjust at some point in the future (possibly to an even higher amount than what's currently available with a conventional mortgage). This option isn't for everyone, but it could save you some money now. Plus, you could always refinance to a fixed rate when the market stabilizes in the years to come.
Learn more about your mortgage rate options here today.
The bottom line
Inflation, even if unchanged in September, is still a major concern for borrowers around the country. And with it still above the Fed's goal, it could be a portend for yet another rate hike in the weeks to come. With this understanding, homebuyers may want to lock in a mortgage rate now before they tick up even further. These buyers should also explore other ways to get a below-average rate by potentially buying mortgage points and/or securing an adjustable-rate mortgage.
