Mortgage Rates Take a Dip in Wake of Fed Meeting Despite Rate Cut Outlook

In a surprising turn, mortgage rates have slightly declined, with the 30-year fixed rate falling to an average of 6.63%. This change follows the U.S. Federal Reserve's recent meeting, where they decided not to ease monetary policy in March, citing a robust economy and a slowdown in inflation rates.

Mortgage Rate Trends

Despite the Fed's stance, some investors are optimistic about a potential interest rate cut in May. Projections suggest that mortgage rates may decrease further throughout the year in response to any Fed rate adjustments.

Freddie Mac's latest weekly survey shows that 30-year fixed-rate mortgages have seen a slight dip to about 6.63%, a decrease of 6 basis points from the week before. Comparatively, a year prior, the rate stood at 6.09%. Meanwhile, the 15-year fixed-rate mortgage is also down to 5.94% from 5.96% last week, indicating a broader trend in declining rates.

Industry Insights

Data from thousands of mortgage applications informs Freddie Mac’s weekly report, highlighting nationwide borrowing trends. However, data from Mortgage News Daily conflicts slightly, stating a higher average of 6.75% for the 30-year fixed-rate mortgage as of the same day.

Freddie Mac's chief economist, Sam Khater, emphasizes that the combination of a strong economy, favorable demographics, and lower mortgage rates bodes well for the housing market. Additionally, if inflation continues to decelerate, he expects mortgage rates to drop even further.

Lisa Sturtevant, chief economist at Bright MLS, also suggests that anticipation around the Fed’s rate cuts in the spring could lead to lower mortgage rates this year. Yet, she cautions that while declining mortgage rates could improve housing affordability, the resulting higher demand might escalate competition among buyers, potentially raising house prices in the process.

mortgage, rates, economy