Housing News

The Fed Kept Interest Rates Steady. Will Mortgage Rates Remain in the Low 6% Range?

The U.S. Federal Reserve kicked off 2026 by keeping interest rates steady.

That means mortgage interest rates are likely to stay around where they are now, in the low 6% range, at least over the short-term.

While mortgage rates are separate from the Federal Funds rate, the two generally move in the same direction. So, if the Fed indicates a rate cut is likely, mortgage rates often come down.

Even slightly lower rates can make a difference in a monthly mortgage payment, helping homebuyers stretch their budgets and homeowners save money if they refinance their existing loans.

The financial markets expect the Fed to lower rates twice this year, beginning this summer. This could push mortgage rates down.

However, there are no guarantees.

“The big unknown is inflation and the national debt,” said Jason Obradovich, chief investment officer at New American Funding. “Those could derail the government’s efforts to bring mortgage rates down.”

The Fed began hiking rates in 2022 to bring inflation down. If inflation remains stubborn, the Fed may be reluctant to cut. But if unemployment rises, the Fed is more likely to cut rates to spur economic growth.

The Fed held its rates steady throughout much of 2025, before cutting three times towards the end of the year.

“Last year’s cumulative cuts give [Fed] officials room to move more deliberately, while monitoring incoming data and broader financing conditions,” said First American Senior Economist Sam Williamson in a statement. “If inflation continues to ease in a sustained way or if economic growth weakens more than expected, additional [rate] reductions later this year remain possible.”

Mortgage rates could also come down if President Donald Trump’s proposal to have Fannie Mae and Freddie Mac purchase $200 billion in mortgage bonds happens. After the plan was announced, mortgage rates briefly dipped below 6%.

The bonds are basically a bundle of mortgages made by lenders that are sold to investors. This gets the loans off the books of lenders, freeing up capital for lenders to make new loans.

“This administration wants to bring down the cost of housing via mortgage rates,” Obradovich said. “If that continues, then that will be very helpful to mortgage rates and housing.”

The national housing market has gotten a boost recently from lower mortgage rates, home prices declining slightly, and more homes going up for sale, according to the most recent Freddie Mac and December Realtor.com data.

“Slower [home] price growth and rising incomes have pushed [housing] affordability to its best level in more than three years,” Williamson said in a statement.