At its upcoming September meeting, the central bank is expected to hold off on another rate hike.
The most recent Consumer Price Index shows inflation growing 3.7% annually in August, which is above the Fed’s target rate of 2%. While inflation has cooled since last year’s record levels, it’s still too high for comfort. Rate hikes from the Fed increase the cost of borrowing money across the economy and are intended to reduce consumer spending and weaken demand. Mortgage rates have been steadily increasing since March 2022, when the Fed kicked off an aggressive string of rate hikes to curb surging inflation. Read more: Mortgage rate predictions for September 2023: Will rates go up? What to know first It’s important to shop around and compare multiple loan offers to find one that fits your financial needs and offers you a competitive rate or benefits. Mortgage rates can vary widely across lenders. Instead, the question for economists and housing market experts is whether mortgage rates could hit 8% if the Federal Reserve carries out additional rate hikes before the end of the year. That’s the fourth straight week the rate has topped 7%, and it isn’t likely to drop anytime soon. The average rate for a 30-year fixed mortgage was 7.41% last week, according to CNET’s sister site Bankrate. Prospective buyers are dealing with mortgage rates above 7% on top of persistently high home prices. Purchasing a new home isn’t easy in this market.
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