How the Fed meeting will impact mortgage rates, housing market | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

The Federal Reserve voted to keep the federal funds rate unchanged at its meeting on March 17-18, a decision that was widely expected. However, the fed funds rate can still impact mortgage rates, even when the Fed keeps it flat.

During my years reporting on mortgage rates, I have closely followed the correlation between the Federal Reserve and interest rates. The relationship between the two doesn’t usually work the way people assume.

For example, let’s say the Fed does cut the fed funds rate at a meeting. You might think mortgage rates would go down afterward, right? But if this slash is expected, mortgage rates typically drop in the weeks before the meeting in anticipation of this decrease.

They don’t make as many moves after the meeting, though — unless the Federal Reserve Chair makes a remark in their post-meeting statement that changes investor sentiments. For instance, the Chair might say that the Fed expects to lower its rate more times this year than it has previously predicted. In that case, mortgage rates could fall after the meeting.

But what about meetings like this one, when the fed funds rate doesn’t move at all? How do mortgage rates respond?

Mortgage rates will probably hold steady

The same general rules apply for Fed meetings when the central bank doesn’t change the fed funds rate at all. Investors didn’t expect a rate cut, so mortgage rates didn’t decrease leading up to the March meeting.

Rates actually increased for two straight weeks, according to Freddie Mac data, but that likely had little to nothing to do with Fed expectations. Other factors, such as a rising 10-year Treasury yield and conflict in the Middle East, have contributed to recent mortgage rate inclines.

“Mortgage rates track the bond market (specifically, the 10-year Treasury), which doesn’t always move in sync with Fed decisions,” Matt Vernon, head of consumer lending at Bank of America, told TheStreet. “This means that even without a Fed cut or hike, rates could shift based on inflation data, investor sentiment, and broader economic signals.”

Vernon said the Fed does have some impact on mortgage interest rates, particularly on home loans with variable rates, such as adjustable-rate mortgages (ARMs) and home equity lines of credit (HELOCs). However, with the Fed keeping the fed funds rate unchanged, he said mortgage rates should hold relatively steady, unless other factors cause them to shift.

How Powell’s statement could shift mortgage rates

The Fed also indicated that it plans to make only one quarter-point fed funds rate cut in 2026, which was widely expected. The Fed needs to see higher employment rates and slower inflation before lowering its rate.

The U.S. and Israel attacked Iran on Feb. 28, and the conflict doesn’t appear to be ending anytime soon. In his Wednesday, March 18, statement, Fed Chair Jerome Powell said the central bank needs more time to see how the conflict and tariffs will affect longer-term inflation before lowering its rate.

More on mortgage rates and the housing market:

“We’re well aware of the performance of inflation over the last few years and how a series of shocks have interrupted progress that we’ve made over time,” Powell said.

Because economists expected the Fed to hold its rate and predict one rate cut in 2026, mortgage rates may not move much in response to the Fed meeting. However, conflict in Iran has already contributed to higher mortgage rates, and Powell expressed that the turmoil will impact Fed moves later in the year.

So, mortgage rates could hold steady or tick up after the Fed meeting — but don’t expect them to decrease.

Factors impacting mortgage rates over the next month

We don’t need to wait for the Fed meeting on April 28-29 to see how the economy will affect mortgage rates. Here are some key factors that impact interest rates and could move mortgage rates over the next several weeks, regardless of what the Fed does at its next meeting.

Inflation could shift. Not only does inflation affect the Fed’s decision about the fed funds rate, but slower inflation also typically pushes mortgage rates down. “Cooling prices would likely do more to bring rates down than a rate cut alone,” said Vernon.
Developments in the Middle East could push up mortgage rates. “With the Fed [holding] rates steady at its meeting this week, markets are likely to remain focused on geopolitics and any signs of policy relief until there is a clearer path toward de-escalation,” said Jeff DerGurahian, loanDepot’s chief investment officer and head economist.
Employment could slow down even more. DerGurahian told TheStreet that if jobs reports continue to show weak data, mortgage rates may decrease in response.