What Is Going on with Mortgage Rates?

KCM • May 18, 2024

What Is Going on with Mortgage Rates?




You may have heard mortgage rates are going to stay a bit higher for longer than originally expected. And if you’re wondering why, the answer lies in the latest economic data. Here’s a quick overview of what’s happening with mortgage rates and what experts say is ahead.

Economic Factors That Impact Mortgage Rates

When it comes to mortgage rates, things like the job market, the pace of inflation, consumer spending, geopolitical uncertainty, and more all have an impact. Another factor at play is the Federal Reserve (the Fed) and its decisions on monetary policy. And that’s what you may be hearing a lot about right now. Here’s why.

The Fed decided to start raising the Federal Funds Rate to try to slow down the economy (and inflation) in early 2022. That rate impacts how much it costs banks to borrow money from each other. It doesn't determine mortgage rates, but mortgage rates do respond when this happens. And that’s when mortgage rates started to really climb.

And while there’s been a ton of headway seeing inflation come down since then, it still isn’t back to where the Fed wants it to be (2%). The graph below shows inflation since the spike in early 2022, and where we are now compared to their target rate:



As the graph shows, we’re much closer to their goal of 2% inflation than we were in 2022 – but we’re not there yet. It's even inched up a hair over the last 3 months – and that’s having an impact on the Fed’s plans. As Sam Khater, Chief Economist at Freddie Mac, explains:

“Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates.”

Basically, long story short, inflation and its impact on the broader economy are going to be key moving forward. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“It’s the longer-term outlook for economic growth and inflation that have the greatest bearing on the level and direction of mortgage rates. Inflation, inflation, inflation — that’s really the hub on the wheel.”

When Will Mortgage Rates Come Down?

Based on current market data, experts think inflation will be more under control and we still may see the Fed lower the Federal Funds Rate this year. It’ll just be later than originally expected. As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), said in response to the Federal Open Market Committee (FOMC) decision yesterday:

“The FOMC did not change the federal funds target at its May meeting, as incoming data regarding the strength of the economy and stubbornly high inflation have resulted in a shift in the timing of a first rate cut. We expect mortgage rates to drop later this year, but not as far or as fast as we previously had predicted.”

In the simplest sense, what this says is that mortgage rates should still come down later this year. But timing can shift as new employment and economic data come in, geopolitical uncertainty remains, and more. This is one of the reasons it’s usually not a good strategy to try to time the market. An article in Bankrate gives buyers this advice:

“ . . . trying to time the market is generally a bad idea. If buying a house is the right move for you now, don’t stress about trends or economic outlooks.”

Bottom Line

If you have questions about what’s happening in the housing market and what that means for you, let’s connect.


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What a Government Shutdown Really Means for the Housing Market

By KCM • November 6, 2025
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2026 Housing Market Outlook

By KCM • October 26, 2025
2026 Housing Market Outlook After a couple of years where the housing market felt stuck in neutral, 2026 may be the year things shift back into gear. Expert forecasts show more people are expected to move – and that could open the door for you to do the same. More Homes Will Sell With all of the affordability challenges at play over the past few years, many would-be movers pressed pause. But that pause button isn’t going to last forever. There are always people who need to move. And experts think more of them will start to act in 2026 (see graph below): What’s behind the change? Two key factors: mortgage rates and home prices. Let’s dive into the latest expert forecasts for both, so you can see why more people are expected to move next year. Mortgage Rates Could Continue To Ease The #1 thing just about every buyer has been looking for is lower mortgage rates . And after peaking near 7% earlier this year, rates have started to ease. The latest forecasts show that could continue throughout 2026, but it won’t be a straight line down (see graph below): There’s a saying: when rates go up, they take the escalator. But when they come down, they take the stairs. And that’s an important thing to remember. It’ll be a slow and bumpy process. Expect modest improvement in mortgage rates over the next year but be ready for some volatility. There will be volatility along the way as new economic data comes out. Just don't let it distract you from the bigger picture: the overall trend will be a slight decline. Forecasts say we could hit the low 6s, or maybe even the high 5s. And remember, there doesn't have to be a big drop for you to feel a change. Even a smaller dip helps your bottom line. If you compare where rates are now to when they were at 7% earlier this year, you’re already saving hundreds on your future mortgage payment. And that’s a really good thing. It’s enough to make a real difference in affordability for some buyers. Home Price Growth Will Be Moderate What about prices? On a national scale, forecasts say they’re still going to rise, just not by a lot. With rates down from their peak earlier this year, more buyers will re-enter the market. And that increased demand will keep some upward pressure on prices nationally – and prevent prices from tumbling down. So, even though some markets are already seeing slight price declines, you can rest easy that a big crash just isn’t in the cards. Thanks to how much prices rose over the last 5 years, even the markets seeing declines right now are still up compared to just a few years ago. Of course, price trends will depend on where you are and what’s happening in your local market. Inventory is a big driver in why some places are going to see varying levels of appreciation going forward. But experts agree we’ll see prices grow at the national level (see graph below): This is yet another good sign for buyers and overall affordability. While prices will still go up nationally, it’ll be at a much more sustainable pace. And that predictability makes it easier to plan your budget. It also gives you peace of mind that prices won’t suddenly skyrocket overnight. Bottom Line After a quieter couple of years, 2026 is expected to bring more movement – and more opportunity. With sales projected to rise, mortgage rates trending lower, and price growth slowing down, the stage is set for a healthier, more active market. So, the big question: will you be one of the movers making 2026 your year? Let’s connect if you want to get ready.

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By KCM • October 25, 2025
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