“Homebuyers will remain active into early 2026,” one economist said Wednesday. Another expert pointed out that “mortgage interest rates are almost 1 percentage point lower than they were a year ago.”
The Fed chose Wednesday to keep interest rates unchanged at its first meeting in 2026. This was an expected decision, but it came amid political and financial uncertainty.
“Available indicators suggest that economic activity is expanding at a steady pace,” the Fed said in a statement. However, the statement also noted that employment growth has been slow and inflation “remains moderately high.” Given current economic conditions, the Fed ultimately “decided to maintain the target range for the federal funds rate at 3.5% to 3.75%,” the statement added.
The move was widely expected.
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Although the Federal Reserve does not set mortgage rates, its decisions to raise or lower the base rate affect the cost for borrowers to take out loans to buy a home. As a result, the Fed’s moves have been closely watched by housing and real estate experts, many of whom have been expecting mortgages to become cheaper for years.
However, the Fed’s decision to hold policy on Wednesday suggests that changes in the mortgage sector will only occur gradually.
Mike Fratantoni
Following the Fed’s decision, Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, said in a statement Wednesday that “MBA’s forecast is that mortgage rates will remain within a relatively narrow range for some time, likely between 6 and 6.5.” [percent] Covers 30-year conforming loans. ”
“The news of this meeting does not change the outlook for mortgage rates,” Fratantoni added.
Also Wednesday, MBA reported that mortgage applications fell 8.5% last week compared to the previous week.
“Mortgage rates rose for the first time in a month, and as expected, refinance applications fell by 16%. The 30-year fixed rate was at a three-week high of 6.24%,” MBA Vice President and Principal Deputy Economist Joel Kang said in a statement.
Joel Kang
However, Prime Minister Kang offered some hope, noting that the situation last week was also better than the same period a year ago.
He added: “Purchase applications are up 18% on last year’s pace and average loan amounts remain at their highest level since September 2025, indicating that homebuyer demand remains active in early 2026.”
Rocket Mortgage Chief Business Officer Bill Banfield also expressed optimism in a statement Wednesday: “The housing market is not defined by a single rate decision. It changes when people can plan with confidence.”
bill banfield
Banfield added: “Even without a rate cut now, mortgage rates are almost 1 percentage point lower than they were a year ago, when rates were hovering around 6.9%.” “This steady improvement year after year builds buyer confidence and brings people back to the market.”
Banfield also said that “buyers and homeowners have largely accepted that 5.5% to 6.5% is the new normal.”
The Fed’s decision didn’t make a dent on Wednesday, but a cloud of uncertainty still hangs over the Fed. President Trump has been critical of Chairman Jerome Powell throughout his tenure, and the situation reached a climax earlier this month when the Justice Department subpoenaed the Fed for a grand jury. The Justice Department is also threatening to launch criminal charges over Mr. Powell’s testimony before the Senate Banking Committee last summer.
This situation raises questions about the Fed’s independence. Meanwhile, President Trump has reportedly narrowed his list of candidates to replace Powell to four.
Trump’s feud with Powell and the Fed also comes as the White House is at odds with other national leaders and embarking on a series of unconventional foreign policy plans, including tariffs, intervention in Venezuela and the prospect of seizing Greenland.
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