Mortgage rates are holding steady as the Federal Reserve meets to discuss potential adjustments to its benchmark interest rate. Experts believe that the Fed is unlikely to make any changes until inflation cools down enough to warrant rate cuts. This means that homebuyers may not see much improvement in mortgage affordability in the near future. However, if inflation continues to decrease and the Fed eventually cuts rates, there may be some modest improvements in mortgage rates by the end of the year.
The Fed is closely monitoring inflation and labor market data to determine the direction of interest rates. Economic indicators, such as the Consumer Price Index and the unemployment rate, will play a significant role in the Fed’s decision-making process. If economic data weakens, mortgage rates could decrease even before any official rate cuts are implemented.
While some experts suggest that the Fed may make its first rate cut in July, others believe that it is more likely to happen in the fall or early winter. The timing of rate cuts may also be influenced by the upcoming general election in November. Overall, experts anticipate that mortgage rates will moderate in the coming months but may still remain relatively high compared to previous predictions.
Affordability for homebuyers is not just affected by mortgage rates but also by other factors such as high home prices, limited housing supply, and inflation. Gradual improvements in mortgage rates over the next few years may help improve affordability, but addressing housing supply issues through residential construction reforms is crucial for long-term affordability. In the meantime, prospective homebuyers can take steps to improve their credit score, save for a larger down payment, and explore first-time homebuyer programs to make purchasing a home more accessible.