What Does the Fed Pause Mean For Mortgage Rates?

The Federal Open Market Committee is the one who evaluates various key economic indicators when deciding whether to raise or lower mortgage rates. One key signal is the inflation rate. According to the Fed, a 2% inflation rate is the sweet spot for maximum employment and price stability. In 2022, the Fed acted aggressively to tame rising inflation, boosting rates by 50-75 basis points seven times throughout the year. In its most recent statement, the FOMC noted that it will continue to raise rates as it sees fit:

“In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans.”

So what can you do to prepare yourself for buying a home?

1) Improve your credit score

2) Research mortgage lenders and their products

3) Save more money for a down payment

4) And once you’re in it, lock down your rate as quickly as possible!