The Fed met this week and as expected didn’t change the overnight interest rate. They have been staying cautious as employment and inflation are their major concern.
With inflation slightly higher this month the Fed decided to wait. They are seeing inconsistent data on the slowing of employment and there hasn’t been enough data on the impact of the tariffs, so they are waiting to see what happens in the next few months. In the Fed’s post meeting statement they said the economic activity moderated over the first half of the year, with low unemployment, solid labor conditions but somewhat elevated inflation.
At the meeting this week, the committee voted 9-3 to maintain the current Federal funds rate. With the latest projection materials from the Fed show that the majority of the members believe there will be at least one rate cut in 2025.
When the Fed changes rates, it doesn’t set mortgage rates but the Fed’s monetary policies do correlate with mortgage rate movements. However that doesn’t mean if the Fed drops the rate that we see mortgage rates drop. Last September when the Fed dropped rates, we actually saw mortgage rates increase.
Current rates are more than double the all time low of 2.65% reached in January 2021. But if you look at the historic average, they are lower than the average over the past 30 years. Here is a chart showing the average rates since 1971.
Chart represents weekly averages for a 30-year fixed-rate mortgage. Average for 1971-2025 as of July 18, 2025. Source: Freddie Mac PMMS
Because we have seen the lowest rates in the last few years, it’s hard to think about rates over 7-8% but that has been the case in the past. We’ll see how 2025 plays out with potential rate cuts this fall. The concern will be if rates do drop, will we see home prices increase due to more buyers? The best plan you can have is a preapproval so you are ready to buy. If you aren’t sure what you should be doing, please reach out and we can talk about options for you.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
