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What will mortgage interest rates look like this September?
The mortgage market has been on a wild ride over the last several years. It all started when rates plummeted to historic lows in 2020 and 2021, with 30-year mortgage rates dipping below 3%. As the economy rebounded and inflation surged in the two years following, things changed drastically. The Federal Reserve embarked on an aggressive rate-hiking campaign, which drove up mortgage rates significantly and made it tough to borrow at an affordable rate.
With the Fed rate remaining locked at a 23-year high, mortgage rates remain elevated even now. While today’s rates aren’t as high as the 8% mortgage rates that we saw in late 2023, the average rate is currently 6.57% for 30-year mortgage loans and 5.95% for 15-year mortgage loans — so it’s still expensive for the average buyer to finance a home. But things may not stay this way for much longer.
Inflation has been cooling over the last four months and is now inching closer to the Fed’s 2% target rate. In turn, changes could be coming to the interest rate environment as soon as next month. So what can we expect mortgage interest rates to look like this September? That’s what we’ll break down below.
See how low of a mortgage interest rate you could secure here now.
What will mortgage interest rates look like this September?
Most analysts and experts expect that the Fed will conduct its first rate cut of the year at its meeting next month, which is scheduled for September 17 to 18. The CME FedWatch tool also suggests a high likelihood of a rate cut occurring and predicts that the federal funds rate will be reduced to a range of 5.00% to 5.25% — a drop of 25 basis points from the current range of 5.25% to 5.50%.
That anticipated Fed rate cut won’t directly impact mortgage rates, but it could influence them. However, it’s crucial to temper your expectations, as any initial drop in mortgage rates is likely to be modest.
For example, if the Fed cuts rates by 25 basis points (0.25%) next month, we might see the average 30-year mortgage rate fall from its current 6.57% to around 6.32%. On a $300,000 loan, this would translate to a monthly payment reduction of about $49 – from $1,910 to $1,861. It would also have an impact on the total interest paid over the longer term.
To put this into perspective, let’s look at the total interest paid over the life of the loan:
- At 6.57%: The total interest paid over 30 years would be approximately $387,612.
- At 6.32%: The total interest paid over 30 years would be approximately $369,899.
This represents a potential savings of $17,713 in interest over the full term of the mortgage – a significant amount despite the seemingly small monthly difference.
For 15-year mortgages, a similar 25 basis point reduction from the current 5.95% could bring rates closer to 5.70%. On a $300,000 loan, this would lower your payments by approximately $40 each month – dropping from $2,523 to $2,483.
It would also impact the total interest paid over the life of the 15-year mortgage:
- At 5.95%: The total interest paid over 15 years would be approximately $154,225.
- At 5.70%: The total interest paid over 15 years would be approximately $146,976.
This represents a potential savings of $7,249 in interest over the 15-year term.
Find out how affordable the right mortgage loan can be today.
Looking beyond September
While September may bring some relief in terms of mortgage rates, it’s important to maintain a long-term perspective. The era of ultra-low rates we saw in 2020-2021 is unlikely to return anytime soon.
However, if inflation continues to moderate and economic growth remains stable, we could see a gradual decline in rates over the coming months and into 2025. This decline is likely to be measured and deliberate, though, rather than dramatic.
How to prepare for lower mortgage rates
If you’re planning to take out a mortgage loan once rates drop, there are a few things you can do to prepare:
- Improve your credit score: Even in a falling rate environment, the best rates are reserved for those with excellent credit. Take steps now to boost your score by paying down debt, ensuring on-time payments and addressing any errors on your credit report.
- Stay informed: Keep an eye on what happens with the Fed and any other economic indicators. While you can’t time the market perfectly, being informed can help you make better decisions.
- Explore different loan types: While 30-year fixed-rate mortgages are the most common option, other loan types, like 15-year mortgages or adjustable-rate mortgages (ARMs) might offer lower rates, so make sure to compare your choices.
- Be ready to act: If rates do start to fall more significantly, be prepared with your documentation and pre-approvals so you can move quickly.
The bottom line
The mortgage market appears poised for a potential shift next month, which could be your opportunity to lock in a better mortgage rate. While mortgage interest rates are unlikely to see a return to the rock-bottom rates of recent years, even small decreases, like the one expected in September, can make a significant difference over the life of a loan. And remember: If you find a rate that works for your budget now, don’t hesitate to lock it in. Waiting for lower rates is always a gamble, especially in today’s unusual economic landscape.
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Gazan chefs cook up hope and humanity for online audience
Renad Atallah is an unlikely internet sensation: a 10-year-old chef, with a repertoire of simple recipes, cooking in war-torn Gaza. She has nearly a million followers on Instagram, who’ve witnessed her delight as she unpacks parcels of food aid.
We interviewed Renad via satellite, though we were just 50 miles away, in Tel Aviv. [Israel doesn’t allow outside journalists into Gaza, except on brief trips with the country’s military.]
“There are a lot of dishes I’d like to cook, but the ingredients aren’t available in the market,” Renad told us. “Milk used to be easy to buy, but now it’s become very expensive.”
I asked, “How does it feel when so many people like your internet videos?”
“All the comments were positive,” she said. “When I’m feeling tired or sad and I want something to cheer me up, I read the comments.”
We sent a local camera crew to Renad’s home as she made Ful, a traditional Middle Eastern bean stew. Her older sister Noorhan says they never expected the videos to go viral. “Amazing food,” Noorhan said, who added that her sibling made her “very surprised!”
After more than a year of war, the Gaza Strip lies in ruins. Nearly everyone has been displaced from their homes. The United Nations says close to two million people are experiencing critical levels of hunger.
Hamada Shaqoura is another chef showing the outside world how Gazans are getting by, relying on food from aid packages, and cooking with a single gas burner in a tent.
Shaqoura also volunteers with the charity Watermelon Relief, which makes sweet treats for Gaza’s children.
In his videos online, Shaqoura always appears very serious. Asked why, he replied, “The situation does not call for smiling. What you see on screen will never show you how hard life is here.”
Before dawn one recent morning in Israel, we watched the UN’s World Food Program load nearly two dozen trucks with flour, headed across the border. The problem is not a lack of food; the problem is getting the food into the Gaza Strip, and into the hands of those who desperately need it.
The UN has repeatedly accused Israel of obstructing aid deliveries to Gaza. Israel’s government denies that, and claims that Hamas is hijacking aid.
“For all the actors that are on the ground, let the humanitarians do their work,” said Antoine Renard, the World Food Program’s director in the Palestinian territories.
I asked, “Some people might see these two chefs and think, well, they’re cooking, they have food.”
“They have food, but they don’t have the right food; they’re trying to accommodate with anything that they can find,” Renard said.
Even in our darkest hour, food can bring comfort. But for many in Gaza, there’s only the anxiety of not knowing where they’ll find their next meal.
For more info:
Story produced by Mikaela Bufano. Editor: Carol Ross.
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A study to devise nutritional guidance just for you
It’s been said the best meals come from the heart, not from a recipe book. But at this USDA kitchen, there’s no pinch of this, dash of that, no dollops or smidgens of anything. Here, nutritionists in white coats painstakingly measure every single ingredient, down to the tenth of a gram.
Sheryn Stover is expected to eat every crumb of her pizza; any tiny morsels she does miss go back to the kitchen, where they’re scrutinized like evidence of some dietary crime.
Stover (or participant #8180, as she’s known) is one of some 10,000 volunteers enrolled in a $170 million nutrition study run by the National Institutes of Health. “At 78, not many people get to do studies that are going to affect a great amount of people, and I thought this was a great opportunity to do that,” she said.
It’s called the Nutrition for Precision Health Study. “When I tell people about the study, the reaction usually is, ‘Oh, that’s so cool, can I do it?'” said coordinator Holly Nicastro.
She explained just what “precise” precisely means: “Precision nutrition means tailoring nutrition or dietary guidance to the individual.”
The government has long offered guidelines to help us eat better. In the 1940s we had the “Basic 7.” In the ’50s, the “Basic 4.” We’ve had the “Food Wheel,” the “Food Pyramid,” and currently, “My Plate.”
They’re all well-intentioned, except they’re all based on averages – what works best for most people, most of the time. But according to Nicastro, there is no one best way to eat. “We know from virtually every nutrition study ever conducted, we have inner individual variability,” she said. “That means we have some people that are going to respond, and some people that aren’t. There’s no one-size-fits-all.”
The study’s participants, like Stover, are all being drawn from another NIH study program called All Of Us, a massive undertaking to create a database of at least a million people who are volunteering everything from their electronic health records to their DNA. It was from that All of Us research that Stover discovered she has the gene that makes some foods taste bitter, which could explain why she ate more of one kind of food than another.
Professor Sai Das, who oversees the study at Tufts University, says the goal of precision nutrition is to drill down even deeper into those individual differences. “We’re moving away from just saying everybody go do this, to being able to say, ‘Okay, if you have X, Y and Z characteristics, then you’re more likely to respond to a diet, and somebody else that has A, B and C characteristics will be responding to the diet differently,'” Das said.
It’s a big commitment for Stover, who is one of 150 people being paid to live at a handful of test sites around the country for six weeks – two weeks at a time. It’s so precise she can’t even go for a walk without a dietary chaperone. “Well, you could stop and buy candy … God forbid, you can’t do that!” she laughed.
While she’s here, everything from her resting metabolic rate, her body fat percentage, her bone mineral content, even the microbes in her gut (digested by a machine that essentially is a smart toilet paper reading device) are being analyzed for how hers may differ from someone else’s.
Nicastro said, “We really think that what’s going on in your poop is going to tell us a lot of information about your health and how you respond to food.”
Stover says she doesn’t mind, except for the odd sounds the machine makes. While she is a live-in participant, thousands of others are participating from their homes, where electronic wearables track all kinds of health data, including special glasses that record everything they eat, activated when someone starts chewing. Artificial intelligence can then be used to determine not only which foods the person is eating, but how many calories are consumed.
This study is expected to be wrapped up by 2027, and because of it, we may indeed know not only to eat more fruits and vegetables, but what combination of foods is really best for us. The question that even Holly Nicastro can’t answer is, will we listen? “You can lead a horse to water; you can’t make them drink,” she said. “We can tailor the interventions all day. But one hypothesis I have is that if the guidance is tailored to the individual, it’s going to make that individual more likely to follow it, because this is for me, this was designed for me.”
For more info:
Story produced by Mark Hudspeth. Editor: Ed Givnish.
“Sunday Morning” 2024 “Food Issue” recipe index
Delicious menu suggestions from top chefs, cookbook authors, food writers, restaurateurs, and the editors of Food & Wine magazine.
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