Citing that economic activity has continued to expand, unemployment remains low, and the labor market remains solid, the Federal Open Market Committee on Wednesday voted to maintain the fed funds rate in the current range of 4.25% to 4.5%, but hinted that it may cut rates later this year.
The committee opted to keep rates flat in part due to economic uncertainty – and that inflation remains only somewhat elevated. It was the fourth consecutive FOMC meeting that the committee decided to keep rates flat.
Although the decision was widely expected, it means there will likely be no mortgage rate relief for prospective home buyers anytime in the near future.
“With inflation cooling but not yet fully under control, the Fed is taking a measured approach — wanting to avoid cutting too soon while still leaving room to pivot if conditions warrant it,” says Samir Dedhia, CEO of One Real Mortgage, in a statement. “Markets are currently pricing in two rate cuts before the end of the year, likely in September and December, depending on how inflation and labor data evolve over the summer.”
“Mortgage rates have remained relatively stable in response,” Dedhia says. “The 30-year fixed is holding near 6.80 percent, and the 15-year fixed is around 5.92 percent, both slightly lower than last week and still comfortably under the important 7 percent threshold. That consistency offers some reassurance for homebuyers and homeowners, especially in a market that’s been sensitive to every shift in economic sentiment. Lower inflation data, including this week’s softer CPI and PPI reports, has helped ease pressure on rates for now.”
“Looking ahead, all eyes are on the Fed’s upcoming meetings in July, September, October, and December,” Dedhia adds. “Any indication of a policy shift whether through rate cuts or changes in their economic outlook could quickly impact mortgage pricing. For buyers and homeowners considering a refinance, this current period of stability may be a smart window to take action. Even small rate adjustments can translate into meaningful savings over time, especially in today’s high-cost housing environment.”
Photo: Susan Q Yin