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Federal Reserve Decision & Mortgages

As you may know, when the U.S. Federal Reserve raises interest rates, mortgage rates usually follow suit (more on that below). 

However, at the March Fed meeting, mixed signals complicated matters. The Fed raised rates by 0.25% at the meeting but seemed to have a different message looking ahead.

In fact, Federal Reserve Chair Jerome Powell indicated that the Fed’s rate hike campaign is nearing an end, potentially good news for prospective borrowers. (This statement is key, as even subtle language changes by the Fed can affect interest rates of popular mortgage products.)

After the 0.25% rate hike announcement at the March 22nd Fed meeting, mortgage rates dropped for the day. You can take a look at where mortgage rates are now here.

Considering Rates’ Trajectory 

When considering the future trajectory of rates, it’s important to note that the actions of the Federal Reserve do not directly impact the interest rates of fixed-rate mortgages. 

Instead, the Fed’s actions and statements affect 10-year Treasury yields — which are highly correlated to the direction of mortgage rates. With that said, for clues on the direction of mortgage interest rates, we can look to the U.S. 10-Year Treasury Note Yield.

At the end of the first quarter, the yield had fallen from highs of over 4% made in early March, with pressure on yields coming from recent bank failures. This activity helped edge rate mortgage rates lower to end the quarter. 

You can take a look at where the U.S. 10-Year Treasury Note Yield is currently here. 

Is It a Good Time to Buy?

Often asked, it's the million-dollar question. And industry analysts are still offering varied perspectives on the state of the housing market.

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR,) said, "Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Moreover, we're seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs."

Factors that could shape the spring housing landscape include generally smaller down payments and declining home prices.    Mortgage Rate Outlooks

  • According to its most recently available forecast, Freddie Mac sees the 30-year fixed mortgage averaging 6.4% in 2023.



  • Realtor.com has higher mortgage rate predictions, seeing 30-year fixed hovering above 7% during 2023. Danielle Hale, Chief Economist at Realtor.com, says that while that forecast is "likely to overestimate mortgage rates for the year," a 7.4% average rate "is still within the range of possibility."

Other estimates show predictions both lower and in between Freddie Mac’s and Realtor.com’s opinions.   Single-Family Homes: Shifting Market?

Could there be a shift in single-family, townhomes, and condos? Recent data released by the National Association of Realtors says the answer could be yes.

Existing home sales soared higher by 14.5% in February, ending a 12-month streak of declines. The encouraging data could help create a better market for buyers and sellers alike. 

As existing-home sales rose, median existing-home prices also declined slightly nationwide, by 0.2%. On top of that, we are seeing some signs of lower mortgage interest rates and increased mortgage demand at the start of the second quarter.

If you think of the real estate market like a pizza, this is like having the dough, sauce, and really good cheese. Should rates trickle lower as some anticipate, you now get your choice of toppings!

That said, even if mortgage rates do tick up a bit this spring, it’s worth mentioning that rates are still going to be historically low. 15% was a favorable rate in the early 1980s. 

Where to go from here

If you have been sitting on the sidelines as a prospective homebuyer or real estate investor, and you feel that it’s a good time to get your financial ducks in a row, please reach out to us.


If you have further questions about financial impacts do not hesitate to email us at office@staltfinancial.com or call 248-733-4344 or schedule an meeting at www.calendly.com/staltfinancial

Stalt Financial does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Stalt Financial's web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. CRN202604-4177412

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