Mortgage interest rates remained largely unchanged this week, hovering near 6.75%, as markets anticipated the outcome of the Federal Reserve's upcoming meeting. Experts widely expect the central bank to keep its benchmark rate unchanged.
The average rate for a 30-year fixed mortgage is currently around 6.70%, according to the latest data. While rates saw a modest dip last week, the recent trend is best described as sideways movement. Rates remain elevated compared to historical lows but are down from peaks seen in late 2023 and early 2024.
Forecasts indicate a high probability that the Federal Reserve will maintain the federal funds rate at its current level following this week's Fed Meeting. This expectation is based on tools tracking market sentiment regarding the probability of rate adjustments.
Mortgage rates are influenced by various economic factors, most closely tracking the yield on the 10-year Treasury yield. While the Fed's decisions impact overall borrowing costs, Treasury yields reflect broader market conditions, including growth and inflation expectations. Recent economic data, including inflation reports and employment levels, support a stable policy approach.
The decision to hold rates follows a period in late 2024 when the Fed initiated rate cuts. However, the central bank has paused these adjustments through its early 2025 meetings, opting for caution as it evaluates incoming economic data.
Beyond market benchmarks, individual borrower finances play a significant role in determining the final mortgage rate offered. Factors such as a borrower's credit score, loan amount, and down payment size are scrutinized by lenders to assess risk. A higher credit score generally results in access to lower rates.
Mortgage application activity shows mixed signals. Overall applications saw a slight decrease recently, while purchase applications edged up slightly, particularly driven by FHA loan applications.
While the immediate outlook points to rate stability, the possibility of future rate cuts later in the year remains subject to economic performance and further Fed guidance. Lenders may adjust rates preemptively based on expectations set during Fed communications, such as the post-meeting press conference.
