Mortgage rate forecasts: Will Fed continue to postpone the reduction of interest rates?

Federal Reserve plays a game of “red, green light” when it comes to interest rateS

On Wednesday Leave your interest rate unchangedPause on a speed of cutting speed, which was fierce with green in September.

Does that mean average average mortgage rates Will there be nearly 7% in the short term? It all depends on one factor: the economy.

After his second term began, President Donald Trump moves forward to some of his Immigration and Commerce policieswhich experts see as inflation.

“Higher tariffs and restrictive immigration policies would increase the cost of home buyers at a time when accessibility is close to four decades,” said Mat WalshThe Moody’s Analytics housing economist.

While Trump has repeatedly said he would lower the mortgage rates to 3% (which would mean the country is in Tough economic crisis), the president does not set interest rates for housing loans. Even the Fed’s political decisions only indirectly influences the mortgage marketS

Regardless of the President’s promise to reduce loan costs if inflation remains high as well as the rates. Mortgage percentages are mainly guided by the movement of the bond market, in particular the 10-year profitability of the Ministry of Finance. If inflation ends the cooling and the Fed resumes the reduction of the rates, the yield of the Ministry of Finance and the mortgage rates may fall, even in anticipation of the next Fed’s move.

Why is the Fed retained as interest rates?

During his remarks after a policy meeting on January 29, Fed President Jerome Powell said employees were in no hurry to lower interest rates and that the central bank was waiting to see if inflation was being relieved. The permanent Pat allows the Fed to evaluate the impact of the policies adopted by the Trump administration.

It is logical to assume that today’s decision will lead to an extended pause, not a one -month leak. Matt Graham Mortgage News Daily says that if inflation drops significantly over the next two months, the most possible reduction of the rates will be in March. However most Investors are betting Another percentage reduction will not come by the end of spring or early summer.

The Fed is already facing the pressure from Trump, who recently demanded interest rates to fall, although the president does not have the direct power to fulfill it. In addition to expressing his opinions, the President’s influence on the central bank is by nameing appointment to fill in vacancies in the Council of Managers.

Although Trump could appoint members of the Fed, whose views on monetary policy are aligned with his own, he can only make new appointments in early 2026.

Will mortgage rates decrease in time for the spring season for buying a home?

Earlier last year, many economists optimistically predicted that interest rates would decrease to 6% by the end of 2024. But after the re -election of Trump and the passage of a Fed from reducing the percentage, the forecast for mortgage rates was more pesimistic.

Fanny May now expects average 30-year fixed mortgage rates In order to keep over 6.5% by the beginning of 2025, Meanwhile, Moody’s Walsh predicts mortgage rates to an average of just under 7% throughout the year.

However, economic data for next month can always change the equation. “If economic data start to lose weight, we may have already seen the peak rates of the year,” said Logan MochtashamiLeading analyst at Housingwire.

In cnet’s 2025Mochtashams noted that the rates in the range of low 6% are still possible in 2025. However, if Trump’s policies recharge inflation or increase sovereign debt deficiency, it will be difficult to achieve, especially in time for the spring season of buying a home.

A look at the Home Market 2025

Today Out -of -home market Results of high mortgage rates, a Housing shortageExpensive housing prices and loss of purchasing power due to inflation.

🏠 Low dwelling inventory: The balanced home market usually has five to six months of delivery. Most markets today are on average about half of that amount. According to Freddie MacWe still have a shortage of about 3.7 million homes.

🏠 increased mortgage Prices: In early 2022, mortgage rates reached historically low from about 3%. As inflation increases and the Fed increased interest rates to tame it, mortgage rates are more than doubled. In 2025, mortgage rates were still high, with the prices of millions of future buyers outside the housing market.

🏠 Effect of fees: As the greater part of the homeowners are Locked in mortgage prices Under 5%, they are reluctant to give up their low mortgage rates and have a small incentive to list their homes for sale, leaving a shortage of resale.

🏠 High dwelling prices: Although housing demand has been limited in recent years, housing prices have remained high due to lack of inventory. The average price of a US home was $ 427,179 In December, 6.2% increased on an annual basis, according to Redfin.

🏠 steep inflation: Inflation means increasing the cost of basic goods and services, reducing purchasing power. It also affects the mortgage rates: when the inflation is high, creditors usually increase interest rates on consumer loans to make a profit.

What should home buyers know

It is never a good idea to rush Buying a home Without knowing what you can afford, so establish a clear budget to buy your home. Here’s what experts recommend before you buy a home:

💰 Build your credit rating. Your credit rating will help you determine if you have qualified for a mortgage and at what interest rate. A credit rating From 740 or higher it will help you qualify for a lower rate.

💰 Save for more advance payment. Greater advance payment Allows you to remove a smaller mortgage and get a lower interest rate from your creditor. If you can afford it, the advance payment of at least 20% will also remove private mortgage insurance.

💰 Shop mortgage lenders. Comparing a loan offers from multiple mortgage lenders can help you Negotiate a better percentageS Experts recommend getting at least two to three loan estimates from different creditors.

💰 Consider hiring. Election of Hire or buy a home It is not only to compare the monthly rent with a mortgage payment. Hiring flexibility and lower costs, but your purchase allows you to build wealth and have more control over housing costs.

💰 Consider mortgage points. You can get a smaller mortgage by buying mortgage pointsIt costs 1% of the total loan amount. One mortgage point is equal to a decrease of 0.25% of your mortgage rate.

More on today’s home market