As we’ve learned over much of this year of higher interest rates for homebuyers and refinancers, any dip in mortgage rates has tended to be short-lived, followed before long by an upswing that has cooled borrower optimism, with that pattern also repeating itself.

This summertime seesaw cycle of slight rate fluctuations in the benchmark 30-year and 15-year mortgage fixed rates has surprised many experts, some of whom expected a steadily rising rate trajectory across the third quarter. But looking back on key factors that influenced rates provides a clearer vision of what may be ahead.

Here’s where we currently stand: At the time of this writing in late August, the average 30-year mortgage rate was 5.88 percent, up from 5.57 percent a month ago, versus 5.08 percent for a 15-year mortgage, for which rates averaged 4.82 percent back in late July. The 5/1 adjustable-rate mortgage (ARM) has averaged around and 4.34 percent.

Where will rates go in September? We reached out to a team of trusted pros for answers.

September mortgage rates

If the assessments from key experts prove out, September rates will probably remain in the same territory they are now, swinging up and down slightly.

“The economy will slow faster than inflation, so more yo-yo action should be expected in September,” Bankrate chief financial analyst Greg McBride says. “The average 30-year fixed will be between 5.6 percent and 6.0 percent, with the average 15-year fixed rate in the 4.75 percent to 5.0 percent neighborhood.”

Rick Sharga, executive vice president of Market Intelligence for ATTOM Data Solutions, echoes that prediction.

“Since peaking at 5.81 percent back on June 23, rates on the 30-year fixed mortgage have bounced around in a pretty narrow range between 4.99 percent and 5.50 percent. I expect they’ll continue to stay within that range,” explains Sharga. “And the 15-year fixed rate loan has largely been moving in concert with 30-year rates, ranging from 4.26 percent to 4.92 percent during the same period. It feels like the market has largely priced in anticipated Federal Reserve rate hikes. So assuming there are no major events that rock the markets over the next month, it seems likely that 15-year loans will stay within that general range – probably between 4.25 percent and 4.75 percent.”

Another metric at play in the weeks ahead is the yield on 10-year U.S. Treasuries. Every time these yields have passed 3 percent recently, we’ve observed a corollary hike in mortgage rates, “so that could be an X-factor over the next few months,” Sharga adds.

Nadia Evangelou, senior economist and director of forecasting for the National Association of Realtors, agrees that expected upcoming Fed rate hikes have already been baked into current mortgage rates.

“Meanwhile, inflation has likely peaked. That means it will gradually decline in the following months. Thus, I don’t expect to see any big surprises in the mortgage market in the coming months. The 30-year fixed mortgage rate will likely remain around 5.5 percent, and a 15-year fixed mortgage rate around 4.8 percent, in September,” she notes.

“I expect mortgage rates will also likely be tied to inflation trends. If inflation continues to rise, the seemingly apparent answer is that interest rates will follow suit.”

— Scott KrinskyResidential Banking Department Partner at Romer Debbas

Major mortgage and real estate market organizations differ in their short-term rate prognostications, although not by much. Fannie Mae, for instance, predicts the 30-year rate to average 5.1 percent by the end of this quarter versus a 5.5 percent average forecasted by Freddie Mac. And the Mortgage Bankers Association foresees a 5.3 percent average rate for the 30-year mortgage across the third quarter.

Forces that might cause rates to fall or rise

Rates seem to be showing some semblance of stabilization over the last month or so, which is a good sign, according to attorney Scott Krinsky, a partner in Romer Debbas’ Residential Banking Department.

“Hopefully, this is the beginning of the end of the crazy rate spikes we’ve seen over the past year. But if we start seeing interest rates with the number ‘6’ listed on the left side of that decimal point sometime soon, I won’t be completely shocked,” he says. In addition to the 10-year U.S. Treasury, “I expect mortgage rates will also likely be tied to inflation trends. If inflation continues to rise, the seemingly apparent answer is that interest rates will follow suit.”

The degree to which the Fed can tame inflation is the single biggest rate factor to watch this autumn, according to Sharga.

“The recent dip in inflation from 9.1 percent to 8.5 percent was a step in the right direction, but it’s still one of the highest inflation rates in over 40 years,” Sharga says. “Fed chairman Powell has pledged to remain aggressive in fighting inflation, which makes more rate hikes imminent. But the rapid and dramatic increase in mortgage rates has put the brakes on what had been a white-hot housing market.”

Consider, adds Sharga, that home sales are off 20 percent year-over-year, and home price appreciation – as well as the cost of housing – is beginning to settle down, which was undoubtedly part of the Fed’s plan.

“Getting inflation under control sooner than later would allow the Fed to limit or avoid more hikes to the Fed Funds rate. That could result in mortgage rates plateauing as well,” he says.

Further insights into mortgage rates

Indeed, looking back on Fed activity over the past few weeks reveals interesting clues.

“Investors have gotten too carried away with the idea that the Federal Reserve is close to pivoting and expecting rate cuts in 2022. And now that they’re recalibrating to continued hawkishness from the Fed, we’ve seen mortgage rates reversing much of the decline seen since mid-June,” McBride says. “The pace of the Federal Reserve’s balance sheet runoff will double beginning in September, and this will be most evident in the market for mortgage-backed securities. All else being equal, this is an upward influence on mortgage rates.”

While both the 30-year and 15-year rates have remained within a fairly narrow range in recent months, it’s noteworthy that they’ve changed much more frequently and suddenly than they have historically, and often without any obvious reason.

“This has been challenging for homebuyers, borrowers, and lenders alike, as a half-point increase in rates can be the difference between qualifying for a mortgage or remaining a renter,” Sharga adds.

Next steps to consider

So what should a prospective borrower do? Whether you are pondering the purchase of a home you’ll finance or are weighing a refi, the best advice is to proceed carefully.

“Now is not a bad time to get a mortgage purchase loan, so long as you have the means to do so,” says Krinsky. “The worst-case scenario is that, if rates drop, you can refinance – so long as your closing costs for doing so makes sense. If you decide to take the wait-and-see approach and time the market, you are potentially freezing yourself out from a rate that may be lower than anything else in the near future.”

McBride’s advice? “As a home buyer, if you have a closing date, then it is time to think about locking your rate and protecting yourself from a quick surge in mortgage rates that would create more affordability headaches.”

Just remember that demand continues to outweigh supply in many markets.

“But demand is weakening, and prices should slow down by the end of the year. So readers who don’t find the home of their dreams today may be well served by waiting a few months,” says Sharga.

And while it may be easy to dismiss the idea of refinancing soon due to higher rates, don’t set aside that thought entirely.

“The interest rate isn’t everything when it comes to refinancing. There are several scenarios where it might make sense to refi,” Krinsky say. “If monthly mortgage payments will significantly decrease from spreading the current debt back over a longer repayment term, it’s an option worth considering as a short-term means of saving money.”

Additionally, owners who have built up equity in their homes can pursue cash-out refinances and then use the proceeds of the loan to pay off things like higher-interest credit card debt or fund investment opportunities, education or home improvements, he adds.

“And borrowers who are approaching the end of an adjustable-rate term in which they fear that rates will go up significantly may still potentially benefit from a fixed-rate refinance, too,” says Krinsky.