By Giulia Carbonaro
Senior Reporter
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The Federal Reserve's decision on Wednesday to leave interest rates unchanged will likely keep mortgage rates stable during the spring selling season as uncertainty grows around the U.S. economy, housing experts said.
Why It Matters
The purchasing power of aspiring homebuyers in the U.S. has been eroded over the past few years by rising prices, a historic lack of inventory and stubbornly high mortgage rates. Homeowners, on the other hand, have been holding on to their lower mortgage payments and delaying selling, contributing to the shortage of homes in the market.
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While last year, experts initially hoped that mortgage rates would lower to the 5 percent mark throughout 2025, they have since revised their expectations to account for rates lingering between the 6 percent and 7 percent mark until the end of 2026.
Within this context, any decline in mortgage rates represents a much-needed boost for both buyers and sellers.
What To Know
The Federal Reserve held the line on Wednesday on its benchmark interest rates, a move that indicates that the central bank is opting for a cautious approach as concerns grow around the impact of President Donald Trump's tariff policies.
Talking to reporters, the Fed Chair Jerome Powell said: "It is going to be difficult to have a precise assessment of how much inflation is coming from tariffs."
The Federal Open Market Committee, which set the rates, kept its key borrowing rate targeted in a range between 4.25 percent and 4.5 percent, where it has been since December. However, the Fed suggested that some cuts will follow later in the year.
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While the Fed does not set mortgage rates, its decision has a direct impact on them. As of March 13, the latest data made available by Freddie Mac, the 30-year fixed-rate mortgage was 6.65 percent, down 0.09 from a year earlier.
According to Realtor.com, mortgage rates are likely to remain stable through spring selling season—traditionally the busiest time of the year for the U.S. housing market—as a result of the Fed's decision.
What People Are Saying
Daniel Hornung, former Deputy Director of the National Economic Council, said in a statement shared with Newsweek: "The Fed raising its near-term inflation projection and lowering its projection for economic growth is all about tariffs and policy uncertainty. These are the major factors standing in the way of interest rates coming down and leading forecasters to raise their recession probabilities."
Realtor.com Senior Economist Joel Berner said in a statement shared with Newsweek: "The first quarter of 2025 has ushered in a bit of relief from mortgage rates, but not much. The recent range is slightly lower than last year, but remains significantly higher than during the post-pandemic buying craze of 2021 and 2022, when rates were roughly half what they are now and prices skyrocketed."
He added: "Many prospective homebuyers have been biding their time, saving up money as rents have declined for 19 consecutive months, waiting for rates to fall. Though that has not occurred in a significant way, other market conditions like growing inventory, falling median listing price, and increased price reductions are setting the stage for more home purchase activity during this spring busy season."
Melissa Cohn, Regional Vice President of William Raveis Mortgage and a 43-year mortgage industry veteran, said in a statement shared with Newsweek: "Tariffs, massive federal layoffs, and immigration policies—it's hard to look at historical data as a base for future Fed predictions. What happens in the economy in the next three months will be the driver of future rate movement from the Fed."
She added: "[Federal Reserve Chair Jerome Powell] has repeatedly said that the Fed is in no hurry to cut rates. The Trump administration's tariffs could reignite inflation, making future rate cuts unlikely, too."
What's Next
Despite uncertainty around the future of the U.S. economy, which could possibly fall into a recession this year, Fed officials said they still expect the central bank to lower rates by a half percentage point before the end of the year.
Bankrate Chief Financial Analyst Greg McBride invited homebuyers waiting for mortgage rates to come down to be patient. "While the idea of interest rates coming down is appealing to many consumers and businesses, the reason for lower interest rates is very important," he said in a statement shared by Realtor.com.
"We want interest rates to decline because inflation declines, not because of economic weakness," he added. "The recent drop in mortgage rates was fueled by concerns of economic weakness, so be careful what you wish for."
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