Boost for Homebuyers From Unchanged Interest Rates

A steady Fed rate means mortgage rates might stabilize in a tight housing market.

A small toy house on a pile of dollar bills on a desk.
(Image credit: Getty Images)

The Fed has given some hope to homebuyers by declining to raise the federal funds rate, a key overnight bank lending rate, at its May meeting. Although the Fed rate and mortgage rates move independently, the same market factors drive the rate increases and cuts. 

Inflation, job growth and the overall economic outlook impact lenders and how they set rates. A steady Fed rate should translate to fewer increases in mortgage rates. However, availability and affordability may still be obstacles when shopping for a home. In its official statement, the Federal Open Market Committee (FOMC) said, "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent" and that  "the Committee remains highly attentive to inflation risks."

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Donna LeValley
Personal Finance Writer

Donna joined Kiplinger as a personal finance writer in 2023. She spent more than a decade as the contributing editor of J.K.Lasser's Your Income Tax Guide and edited state specific legal treatises at ALM Media. She has shared her expertise as a guest on Bloomberg, CNN, Fox, NPR, CNBC and many other media outlets around the nation.