WATCH LIVE: Fed Chair Powell speaks after announcing decision on interest rates
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Newsweek
6 minutes ago
- Newsweek
What Fed Decision Means for Mortgage Rates
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The Federal Reserve held its key interest rate steady for the fourth time this year on Wednesday, leaving its benchmark lending rate unchanged at a range of 4.25 percent to 4.5 percent. For homebuyers, this means that mortgage rates are likely to keep hovering around the 7-percent mark for the foreseeable future. Why the Fed Again Decided Not To Cut Rates A majority of experts were expecting the Federal Reserve to leave its key interest rate unchanged on Wednesday, as the central bank had repeatedly voiced its concerns over the potential impact of White House tariffs on the U.S. economy. While the latest inflation and jobs market reports showed that any disruption caused by tariffs has so far been minor, the Fed is clearly being careful about what could happen in the coming weeks and months. Chair of the U.S. Federal Reserve Jerome Powell speaks during a press conference in Washington, D.C., on June 18, 2025. Chair of the U.S. Federal Reserve Jerome Powell speaks during a press conference in Washington, D.C., on June 18, 2025. SAUL LOEB/AFP via Getty Images The Fed's chair, Jerome Powell, said during a news conference that President Donald Trump's tariffs are likely to bring inflation back up in the coming months, while growth will slow down and unemployment climb. "Increases in tariffs this year are likely to push up prices and weigh on economic activity," Powell said. "This is something we know is coming, we just don't know the size of it." What It Means for the Housing Market While the Fed does not directly set mortgage rates, it influences them through its monetary policies as they generally move in tandem with the yield on 10-year Treasury bonds. This means that the Fed's decisions on rates have an impact on the mortgage market. In this case, mortgage rates are likely to remain "more or less where they are," Melissa Cohn, regional vice president of William Raveis Mortgage and a 43-year mortgage industry veteran, told Newsweek in a statement. "At least for now," she added. As of June 18, the national average 30-year fixed-rate mortgage was 6.81 percent, according to Freddie Mac, down 0.03 percent from a week earlier and 0.06 from a year earlier. While slightly lower than last year, mortgage rates remain nearly three times higher than they were during their pandemic lows, when they spurred a homebuying frenzy across the country. High mortgage rates, together with sky-high prices and other rising costs like home insurance premiums, have made it hard for many Americans to buy a home. In May, sales across the U.S. were down by 5.9 percent while inventory was up 13 percent, according to Redfin. The median sale price of a home was $441,738, up 1 percent year-over-year. But while still high, mortgage rates have somehow stabilized, and homebuyers and sellers have gotten used to them. This could be good for the housing market, which is currently in a bit of a slump. "Following a subdued spring, steady mortgage rates and improving buyer sentiment may set the stage for a bustling summer housing market," senior economic research analyst, Hannah Jones, said in a statement shared with Newsweek. "While home prices remain elevated, market conditions are gradually tilting in favor of buyers, thanks to rising inventory, longer time-on-market, and climbing price reductions," she said. "However, this shift is far from uniform across the country. In many Northeast and Midwest metros, limited supply and sustained buyer demand continue to create tight, competitive conditions, while many Southern metros see inventory levels far surpassing pre-pandemic norms, and falling home prices." Will the Fed Cut Rates Later This Year? Even as they expect tariffs to bring up inflation, the Fed still signaled that it would cut interest rates twice this year. Powell, however, said that the central bank is "well positioned to wait" before making a decision. "The U.S. economy has defied all kinds of forecasts for it to weaken, really over the last three years, and it's been remarkable to see…again and again when people think it's going to weaken out. Eventually it will, but we don't see signs of that now," Powell said. "Ultimately, Chair Powell said the Fed has to be humble about its ability to forecast how tariffs will play out and officials have to wait to see how the economic data actually evolves," Chen Zhao, head of economics research at Redfin, said in a recent press release. "He also offered that no one on the committee has very high conviction about their individual projection. This means that until the Fed feels confident that enough time has passed for the economic data to reflect the inflationary impact of tariffs, they will keep rates unchanged." According to Cohn, it is nearly impossible to make predictions about what the Fed will do in the coming months. "Anyone who's going to make a prediction with any sort of certainty is a fool," she said. "We are fully loaded with uncertainty. We're uncertain about what's going to happen in the Middle East. We're uncertain about what's going on in Ukraine and Russia. We're uncertain about what's going to happen in Gaza. We're uncertain about the tariffs. We're uncertain about the budget." The bond market has been reacting, with yields up earlier this week due to higher oil prices, only to fall again when the weaker retail sales data came out on Tuesday—which shows that consumers are concerned, Cohn said. "There is no reason to believe mortgage rates will fall in the near to medium term," Zhao said. "While mortgage rates are not entirely determined by the Fed Funds rates, they cannot fall much while the Fed remains on hold."
Bloomberg
36 minutes ago
- Bloomberg
US Prepares for Possible Strike on Iran; Powell Gives Tariff Warning
Bloomberg Daybreak Europe is your essential morning viewing to stay ahead. Live from London, we set the agenda for your day, catching you up with overnight markets news from the US and Asia. And we'll tell you what matters for investors in Europe, giving you insight before trading begins. Sources tell Bloomberg that senior US officials are preparing for a possible strike on Iran within the next few days, with signs that the infrastructure needed to join Israel's offensive is being gathered in the region. Meanwhile, the Fed holds US interest rates again with Chair Jerome Powell saying there are lots of unknowns about the outlook for the economy, including the impact of Trump's tariffs. Today's guests: Lale Akoner, eToro, Global Market Analyst. (Source: Bloomberg)
CNET
42 minutes ago
- CNET
Homebuyers See Lower Mortgage Rates: Current Mortgage Rates for June 19, 2025
Check out CNET Money's weekly mortgage rate forecast for a more in-depth look at what's next for Fed rate cuts, labor data and inflation. Average 30-year fixed mortgage rates have remained close to 7% for the last seven months, keeping prospective homebuyers on the sidelines. For a 30-year fixed-rate mortgage, the average rate you'll pay is 6.87% today, down -0.04% from seven days ago. The average rate for a 15-year fixed mortgage is 6.06%, which is a decrease of -0.05% since last week. Lingering inflation, threats of a global trade war and policy turbulence have created an uncertain economic outlook. In response, the Federal Reserve has adopted a wait-and-see approach and kept interest rates steady in 2025, most recently on June 18. If President Trump eases some of his aggressive tariff measures or if the labor market deteriorates, it could prompt the Fed to cut interest rates as soon as September. But prospective homebuyers shouldn't expect mortgage rates to become affordable overnight. While cheaper borrowing costs gradually trickle down to the housing market, the Fed doesn't directly set lenders' mortgage rates. Plus, in today's unaffordable housing market, mortgage rates are just one piece of the puzzle. Prospective buyers still have to contend with high home prices and skyrocketing homeownership expenses. The "="" target="_self">possibility of a job-loss recession is also pushing many households to tighten their budgets and take on less financial risk. When mortgage rates start to fall, be ready to take advantage. Experts recommend shopping around and comparing multiple offers to get the lowest rate. Enter your information here to get a custom quote from one of CNET's partner lenders. About these rates: Bankrate's tool features rates from partner lenders that you can use when comparing multiple mortgage rates. Are mortgage rates considered high right now? Mortgage rates primarily take their cues from the 10-year Treasury yield, which reflects investors' collective expectations regarding inflation, labor market health, upcoming monetary policy shifts and the impact of global factors like tariffs. If investors anticipate persistently high inflation or significant government borrowing, they'll demand higher returns on their bonds, which in turn keeps mortgage rates elevated. "Rates could fall if inflation keeps cooling and the labor market softens," said Jeb Smith, licensed real estate agent and member of CNET Money's expert review board. "On the other hand, tariffs could create new inflation pressure. Add in government deficits and increased bond supply, and that puts upward pressure on rates." Even as the Fed eventually starts to lower interest rates, experts warn of a lot more volatility in the market. As a result, homebuyers are being more patient and strategic about financing, comparing different loan types and planning ahead. "Some are waiting, others are getting pre-approved now so they're ready to act if rates fall," said Smith. For a look at mortgage rate movement in recent years, see the chart below. Mortgage predictions for 2025 Despite hopes that 2025 would bring relief to the housing market, economic and political instability have kept it stuck in neutral. Median family income has not kept pace with the surge in housing costs, requiring many households to earn double or triple their salary to afford a modest home in some cities. Meanwhile, the "lock-in" effect, where current homeowners with low-rate mortgages are reluctant to sell and take on higher interest rates, has kept housing inventory tight and fueled price competition in high-demand areas. According to Smith, home loan rates could decline slowly and steadily, but numerous risks could also keep rates elevated. Fannie Mae now expects rates around 6.1% by the end of 2025 and 5.8% by the end of 2026. What is a good mortgage type and term? Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront. 30-year fixed-rate mortgages The 30-year fixed-mortgage rate average is 6.87% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you'll have a lower monthly payment. 15-year fixed-rate mortgages Today, the average rate for a 15-year, fixed mortgage is 6.06%. Though you'll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner. 5/1 adjustable-rate mortgages A 5/1 ARM has an average rate of 6.08% today. You'll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option. Calculate your monthly mortgage payment Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET's mortgage calculator below can help homebuyers prepare for monthly mortgage payments. How can I find the best mortgage rates? Though mortgage rates and home prices are high, the housing market won't be unaffordable forever. It's always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right. Save for a bigger down payment: Though a 20% down payment isn't required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
