Mortgage Rates Hold Steady—But for How Long? The Fed’s Decision Explained

At its latest meeting on May 7, 2025, the Federal Reserve decided not to change interest rates — again. For many people, especially those thinking about buying or selling a home, this might sound like complicated financial news. But it has very real effects on your mortgage, your buying power, and the overall housing market.

Here’s what’s going on, in plain English.

What Is the Federal Reserve and Why Do Rates Matter?

The Federal Reserve (or “the Fed”) is like the steering wheel for the U.S. economy. When inflation is too high, they raise interest rates to slow things down. When the economy is struggling, they may lower rates to help things pick up.

The Federal Open Market Committee (FOMC) meets regularly to decide whether to raise, lower, or hold these rates. Right now, they’ve chosen to hold rates steady at 4.25% to 4.5% — the same range it’s been for three meetings in a row.

What Did Jerome Powell Say?

Fed Chair Jerome Powell said that the economy is growing, but there are big uncertainties — especially from new tariffs (taxes on imports) and other global economic pressures.

Here are the key takeaways:

• Inflation is still a concern, so the Fed doesn’t want to lower rates yet.

• New trade tariffs could slow inflation progress, possibly delaying any future rate cuts by up to a year.

• Powell also made it clear that the Fed is independent — it won’t bow to political pressure, even as President Trump publicly calls for rate cuts.

What Does This Mean for Mortgage Rates?

Mortgage rates don’t exactly follow the Fed’s decisions, but they’re influenced by them. Here’s how it breaks down:

• When the Fed holds rates steady, mortgage rates tend to level off or rise slightly.

• If inflation fears continue, lenders may keep mortgage rates higher to protect against risk.

• Don’t expect major drops in mortgage rates anytime soon — buyers and refinancers should plan accordingly.

So, if you’re house-hunting or considering a refinance, don’t wait around for a big drop. Rates might stay right where they are for a while.

What About the Housing Market?

Holding rates steady affects the housing market in a few ways:

1. Home Prices May Stay Flat or Grow Slowly

• Higher mortgage rates reduce how much buyers can afford, which can put a lid on rising home prices.

2. Buyers May Be More Cautious

• Some buyers might hesitate, hoping for lower rates. But others will jump in now, not wanting to risk rates going even higher.

3. Sellers Might Need to Adjust

• With fewer bidding wars and buyers stretching budgets, sellers may need to price homes more competitively.

4. Investors and Renters

• Real estate investors watching mortgage rates will be cautious, and rental demand could stay strong if fewer people buy.

Bottom Line: What Should You Do?

Even though the Fed didn’t change rates, the message is clear: they’re playing it safe. That means we could be in a “wait and see” period for the rest of the year.

If you're a buyer: Focus on finding the right home, not timing the market. Today’s rates might be as good as it gets for a while.

If you're a seller: Be realistic about pricing. A slower market means buyers are more selective.

If you're an investor or renter: Keep an eye on demand. Stable rates may create opportunities — but you’ll need a smart, local strategy.

Need Help Making Sense of the Market?

Whether you’re buying, selling, investing, or just exploring your options, we’re here to help.

Contact us below for expert guidance on how today’s market affects you — and how to move forward with confidence.