Mortgage Rates Set to Remain Higher for Longer

The U.S. Federal Reserve's decision on Wednesday to hold interest rates steady for now has disappointed homebuyers hoping to see lower mortgage rates. Although the Fed's projections suggest a potential decline in mortgage rates in the future, the timing remains uncertain due to current inflation trends, Realtor.com reports.

The Fed is expected to cut rates three times this year. Some economists had predicted that decreases would begin this year. However, higher-than-expected inflation is likely to push those cuts to later this year. That means mortgage rates are likely to stay higher through the spring housing market.

“Even the Fed doesn’t know exactly when they’re going to cut rates because it depends on the inflation data,” says Hale. “We are all playing the waiting game right now.”

The good news for buyers is that the Fed didn’t raise rates either. It had lowered rates during the COVID-19 pandemic to give the economy a boost, but then began raising them to combat high inflation. The Fed hiked rates 11 times since March 2022.

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