Mortgage Fee forecast for July: The Fed is not in a hurry to lower interest rates

For the past few months, Average 30-year fixed mortgage rate Sitting between 6.5% and 7%. Future home buyers should not hold their breath to change soon.

On July 30, the Federal Reserve is expected to hold the borrowing rates in the same way at this year’s Fifth Monetary Policy Conference. The central bank will not directly instruct it Mortgage feesits policy decisions indirectly affect consumer borrowing costs, including mortgages, over the long term.

The mortgage rate, which is primarily associated with the Treasury yield in the bond market for 10 years, is also sensitive to other factors, including investors’ outlook for future Fed moves. Economists are intimately listening to what Fed Chairman Jerome Powell said later this year about tips on interest rate cuts.

“The Fed is not expected to cut fees, but Powell’s language will be very important,” he said. Logan MotashamiLead analyst at Housingwire.

The market is currently hoping for a Fed cut in September. If Powell shows slow progress in inflation and ongoing economic uncertainty, this could keep the Fed in monitor mode this fall, potentially increasing bond yields and mortgage rates.

Ultimately, mortgage interest rates are unlikely to fall significantly from their current range. The economy is slowing significantly or Unemployment rates increase rapidly.

The housing market has been frozen for several years due to the challenges of affordability and rising mortgage fees. As Long-standing housing shortages It will ease in some local markets and allow those buyers to improve their negotiation power, the rest will remain We were locked out at sudden housing prices.

Why is the Fed curbing interest rate cuts?

The Fed has dropped three times after inflation showed continued signs of adoption in late 2024, but this year the photos have become more complicated.

The Fed is tasked with maintaining maximum employment and keeping inflation under control. A slow economic downturn usually guarantees interest rate cuts to stimulate growth, but if inflation is still sticky, a quicker cut in interest rates can drive price growth.

President Trump has been pushing for the Fed to quickly lower the rate, but early reductions in rates, especially in response to political pressure, could exacerbate the problem. “The market may interpret this movement as a signal to a decrease inflationary discipline, and inflation concerns may make it even more likely to increase bond yields.” Kara nga senior economist at Zillow. “Ironically, this could raise mortgage rates and not lower mortgage rates, and counter the intended stimulus.”

Tariffs are also a wild card for the mortgage market and the broader economy. It is assumed to be inflation, but they are temporary and could translate into one-time price increases for goods and services.

“There is a widely held consensus among economists that the potential impact of the administration’s tariff policy and economic growth is still unknown, and there is a widespread consensus that more time is needed to see the full effect.” Selma HepChief Economist of Cotality. “As a result, the Fed is taking a ‘waiting’ approach. ”

Most analysts are hoping for two Fed rate cuts this year, but that’s still thrown as trade negotiations are ongoing, Mohtashami said.

Following signs of slowing inflation in late 2024, the Fed has implemented three interest rate cuts, but this year it has adopted an approach that is seen as a more cautious wait. Policymakers are stabilizing interest rates amidst market fluctuations.

Today’s complex economic situation is a challenge for the Fed, tasked with maintaining maximum employment and controlling inflation. The president argues that prices are low and the Fed should cut prices immediately. However, tariffs, which are taxes on imports, are widely expected to raise prices.

We are already beginning to see the effects: June, Inflation checks up to 2.7%. Although it is lower than expected

As a result, experts say there is a good reason for central banks to continue pausing rate cuts.

“Increasing uncertainty about inflation images reduces the possibility of the Fed’s fee reduction.” hsh.com. “Large inflation would oppose reduction rates because there is no significant deterioration in working conditions.”

A decline in interest rate cuts combined with the recently passed budget bill, which is expected to significantly boost government debt shortages, could sustain upward pressure on long-term bond yields; Mortgage fees. However, Kushi points out that “changes, delays or confirmations about tariffs can sway investors’ feelings and drive yields.”

When will the mortgage rate drop to 6%?

Previous mortgage forecasts showed interest rates had fallen to around 6% by the end of 2025. Mortgage interest rates are currently expected to be slightly soaked. Fannie Mae’s June housing forecast says the average 30-year fixed mortgage rate will reach 6.5% by the end of the year. The Mortgage Bankers Association expects that prices will remain almost flat this year at almost 6.7%.

Generally, housing market experts do not see mortgage charges below 6% until the early late 2026. However, rising or negative unemployment rates can drive a series of Fed cuts, leading to lower bond yields and mortgage rates.

At the same time, if cheaper mortgages arise from economic slump, Households facing unemploymenttighter budgets and economic instability, potential buyers could remain locked out. a recession Although it is not a near-previous conclusion, the risk of unemployment remains and unemployment is on the rise.

Can I lower my mortgage rate?

Future buyers waiting for mortgage fees to drop may need to quickly adapt to a “longer” rate environment. But the power of the market is out of your control, but there are ways to make buying a home a bit more affordable. Last year, almost half of all home buyers secured a mortgage rate of less than 5%. Zillow.

Here are some proven strategies Helps you save up to 1.5% on your mortgage fee.

Build your credit score. Your credit score will help you decide whether you qualify for a mortgage and what interest rates and what interest rates. a Credit score 740 or above will help you qualify for a lower rate.

Save on your comedic down payment. big down payment You can take out fewer mortgages from your lender and get lower interest rates. If you have the chance, at least 20% down payment will also eliminate private mortgage insurance.

Horm Mortgage lender shop. Comparing loan offers from multiple mortgage lenders can help you Negotiate a better rate. Experts recommend getting estimates for at least two to three loans from different lenders.

Consider bormortage mortgage points. You can lower your mortgage rate by purchasing Home Loan PointsThe cost of each point is 1% of the total loan amount. One mortgage point equals a 0.25% reduction in mortgage rate.