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How mortgage rates will be affected by the interest rate pause
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Despite an unexpected uptick in inflation that occurred in late 2023, the Federal Reserve announced today that it would leave interest rates unchanged for now. This is the fourth consecutive rate hike pause by the Fed — keeping its benchmark rate range at a 23-year high of between 5.25% and 5.50%.
“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%,” the Fed said in its statement.
While many were hopeful that the Fed would decrease its benchmark rate during its first meeting of 2024, the rate hike pause is still good news for borrowers who have been facing elevated borrowing costs on everything from credit cards to personal loans. But what exactly does today’s rate hike pause mean for mortgage rates — and potential homebuyers — in particular?
Explore your top mortgage loan options online here.
How mortgage rates will be affected by the interest rate pause
It’s important to note that the Federal Reserve doesn’t directly set rates for mortgages or other lending products. However, the Fed’s benchmark rate does play a role in determining the interest rates banks and lending institutions charge on lending products — and that includes mortgage loans.
For example, as the Fed raised its benchmark rate to try and temper inflation over the last two years, the interest rates on credit cards, personal loans and home equity loans skyrocketed in tandem. That resulted in mortgage rates climbing from about 3% in 2020 and 2021 to where they are currently, at just under 7%.
And, we can expect a similar trend to occur with today’s rate hike pause. The Fed’s benchmark rate will remain steady for now and mortgage rates are likely to do the same.
It can still make sense to lock in your mortgage rate now, though.
While rates are temporarily paused, the Federal Reserve is still working toward its target inflation goal of 2%. And, if the inflation rate ticks up higher in the future, there could be another rate hike on the horizon.
If that happens, mortgage rates are likely to increase again as well. But if you lock in your mortgage rate now and purchase your dream home, you’ll be protected from the impact that future rate hikes could have on your home buying goals.
Find out the top mortgage rates available to you today.
How to find the best mortgage rate in today’s economy
While today’s rate pause probably won’t result in drastically lower mortgage rates, there are a few strategies you can use to ensure that you get the best mortgage rate possible right now. These include:
- Research and compare: Conduct thorough research on various lenders and mortgage products. For example, you can explore different types of mortgages, including fixed-rate and adjustable-rate options. Compare interest rates, terms and fees to identify the most favorable options for your financial situation.
- Improve your credit score: A higher credit score often translates to lower interest rates. Before applying for a mortgage, take steps to improve your credit score by paying off outstanding debts and addressing any inaccuracies on your credit report.
- Save for a larger down payment: A larger down payment can result in a lower loan-to-value (LTV) ratio, making you a more attractive borrower to lenders. This may also lead to better interest rates and terms.
- Consider mortgage points: Mortgage points allow you to prepay interest upfront in exchange for a lower interest rate over the life of the loan. Evaluate whether paying points makes financial sense based on your plans and how long you intend to stay in the home.
- Shop around for quotes: Obtain mortgage quotes from multiple lenders. Don’t hesitate to negotiate and inquire about available discounts or promotions, either, as lenders may offer incentives to secure your business.
The bottom line
While today’s Fed rate pause may not be a game-changer for those in the housing market, it does offer a period of stability, which is a modest victory in today’s economic climate. Homebuyers who are comfortable with current rates may feel comfortable proceeding with their plans, while those concerned about potential rate hikes have a brief window of relief.
That said, navigating the mortgage market in the current economy requires a proactive approach. By following the tips outlined above, you can take advantage of the momentary stability presented by the Fed’s pause to purchase the home of your dreams with the lowest mortgage rate possible.
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President-elect Donald Trump’s incoming administration starts off with mostly good will from the public: a majority of Americans overall are either happy or at least satisfied that he won and are either excited or optimistic about what he’ll do as president.
Trump’s handling of his presidential transition gets approval from most Americans overall and brings near-universal approval from his voters, along with a net-positive response about his selections for Cabinet posts, in particular, Sen. Marco Rubio, who is Trump’s pick to be secretary of state.
After inflation and the economy so dominated the election, Americans are more inclined to think his administration will bring down prices for food and groceries rather than raise them, and his voters overwhelmingly say that. Going into the election, his backers expected that, too.
In a similar vein, Trump’s election already has some Republicans’ views of the economy improving.
Overall, Republicans today are more excited about what Trump will do as president now than they were in 2016 when he was first elected.
Democrats say they feel more scared about what Trump might do than they did in 2016, and a large majority of Democrats think as president he will threaten their rights and freedoms. But at the same time, there seems to be a sense of exhaustion, as fewer than half of Democrats feel motivated to oppose Trump right now.
Americans, and Democrats specifically, do think the Biden administration should work with the incoming Trump administration to ensure a smooth transition, and that congressional Democrats should work with Donald Trump on issues where they find common ground.
Trump and the economy
After winning comes expectations. There’s a net optimism about the incoming administration’s effect on food and grocery prices, especially among Trump’s voters. That comes as most Americans continue to say prices are currently rising. And inflation was a big factor in Trump winning in the first place.
It may be no surprise then that among many potential items for the incoming administration, Americans say plans to lower prices ought to be the top priority.
The percentage of Republicans who call the U.S. economy good, while still low, has gone up, as the percentage who call it very bad has dropped. That pushes voters’ overall evaluation of the economy slightly higher than it’s been this year — and further spotlights how much partisanship, along with optimism, always plays into these evaluations.
Trump selections of Cabinet and agency chiefs for his administration
Trump’s current selections for agency heads and Cabinet picks get rated overwhelmingly as good choices from Trump’s voters, and are net-positive as selections among Americans who have heard enough about them to say. (Many have not heard enough yet.)
As a general rule, Americans want Trump to appoint people who’ll speak their minds and who have experience in the field or agency they’ll run. But in addition to those qualities, Republicans also want people who’ll be loyal to Trump.
A large majority of Republicans and Trump voters think Elon Musk should have at least some influence in the Trump administration. Americans overall are more split on that, largely along partisan lines.
Big majorities of Americans — and a slight majority of Republicans — would like to see the Senate hold hearings on his nominations, rather than let him make those appointments without it.
(Within self-identified Republicans, MAGA Republicans are relatively more inclined to say the Senate should skip the hearings.)
That sentiment holds whether or not people are told or reminded that the Constitution says the Senate should give advice and consent.
As a general matter, though, most of Trump’s voters and most Republicans do want Trump to have more presidential power this term than he did in his last. That sentiment is higher among Republican voters now than during the campaign.
Trump policies
On another economic front, Trump’s voters overwhelmingly favor the idea of tariffs: most of them don’t believe that will make prices higher. (For the third who believe tariffs will raise prices but support them anyhow, this is presumably a cost they’re willing to bear.)
For the public overall, opposition to tariffs goes hand in hand with the belief they’ll lead to higher prices.
As was the case with voters throughout the campaign, most Americans would, in principle, approve of a new mass deportation program.
If the Trump administration does start a mass deportation program, most of the public would have it carried out by law enforcement or current immigration agencies — most would not have the U.S. military do it.
Elections and democracy
The 2024 results have shifted Republicans’ views of U.S. democracy and also returned some confidence to their view of U.S. elections. Few Republicans suspect fraud in 2024. They overwhelmingly did about 2020.
Following Trump’s victory, there’s been an increase in the number of Republicans who say democracy and rule of law is secure, though most Americans continue to say it is not.
Looking ahead, there’s another shift along partisan lines. Throughout the campaign, Republicans said America’s best days were in its past, while Democrats felt they were in the future. These views are reversed now. After Trump’s win, most Republicans feel America’s best days are in its future.
This CBS News/YouGov survey was conducted with a nationally representative sample of 2,232 U.S. adults interviewed between November 19-22, 2024. The sample was weighted to be representative of adults nationwide according to gender, age, race, and education, based on the U.S. Census American Community Survey and Current Population Survey, as well as 2024 presidential vote. The margin of error is ±2.3 points.
