The Federal Reserve announced at its April 28-29 meeting that is keeping the federal funds rate unchanged. This decision was widely expected among economists and investors.
In my decade of reporting on mortgages, I’ve learned that the Fed’s rate impacts mortgage rates — just not always in the ways people assume. For example, a flat fed funds rate actually might be a good thing for home loan rates, given that people expected this decision from the Fed.
“A surprise in either direction could potentially push mortgage rates up in this very reactionary environment,” Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage, told TheStreet. “There are simply too many unknowns concerning the inflationary impact of oil for the Fed to confidently cut rates at this time.”
So, how does the fed funds rate impact mortgage loan rates? And what does the April Fed meeting mean for mortgage rates in 2026?
How the Federal Reserve impacts mortgage rates
My years of reporting on mortgages have also included a lot of Federal Reserve coverage. People seem to think the fed funds rate has a much stronger impact on mortgage interest rates than it really does.
Don’t get me wrong, the Fed affects mortgage rates — just indirectly.
Mortgage interest rates don’t follow the fed funds rate as closely as, say, rates on savings accounts or auto loans. Because mortgages are long-term loans (usually 15 or 30 years), they tend to follow a longer-term benchmark more closely: the 10-year Treasury yield.
So, if the 10-year Treasury yield gradually decreases for a week, you might see mortgage rates decline as well.
Related: NAR reveals problem with housing market, affordability
Where does the Federal Reserve’s rate come in? Well, a lot of the same factors that move the 10-year yield, such as inflation and economic growth, also affect the fed funds rate. Paying attention to the Fed’s rate can give you an idea of what the 10-year Treasury yield will do.
“While the Fed doesn’t directly determine mortgage rates, its decisions influence the broader lending environment, which in turn affects buyers’ purchasing power and overall confidence,” Matt Vernon, head of consumer lending at Bank of America, told TheStreet.
Also, the public’s anticipation of what the Fed will do at its next meeting often drives mortgage rates in the weeks leading up to the meeting. If investors expect the Fed to lower its rate, home loan rates will likely decrease for a few weeks beforehand.
The opposite is also true: When investors expect the Fed to hike its rate, mortgage rates usually climb for two or three weeks.
What the April Fed meeting means for mortgage rates in 2026
The April Federal Reserve meeting will be the last one for Federal Reserve Chair, Jerome Powell, in his current position. President Trump’s nominee, Kevin Warsh, was approved by the Senate banking committee as Powell’s successor on Wednesday morning, and if the Senate votes to officially confirm Warsh, he will take over the role.
Will the fact that this is Powell’s last meeting as Fed Chair shift mortgage rates? Probably not.
“The transition is unlikely to trigger a dramatic immediate shift because much of that change already seems priced in,” Jeff DerGurahian, chief investment officer and head economist at loanDepot, said in a statement.
So, for various reasons, it looks like mortgage rates will stay relatively calm in the near future. But that isn’t necessarily a bad thing.
“Stable rates can encourage buyers who have been on the fence to move forward, helping to support a steady, gradual housing market,” said Vernon.
More on mortgages and mortgage rates:
- Mortgage rate experts adjust forecasts as rates change
- Redfin reveals shift in home prices, housing market
- Dave Ramsey’s controversial message about home affordability
At the time of writing, the CMEFedWatch tool predicted a 99.4% chance of the fed funds rate staying the same at its next meeting in June. It also looks like the Fed could hold its rate through the rest of 2026. Previously, there were indications that the central bank could cut its rate in December.
A flat fed funds rate will have little to no effect on mortgage interest rates. But that doesn’t mean rates won’t move at all. As we’ve seen over the last couple of months, factors ranging from unemployment to geopolitical unrest can still move mortgage rates.
Tips for getting a lower mortgage rate as rates stay stagnant
Since people aren’t expecting the Federal Reserve to lower its rate, there’s a decent chance that the national average mortgage rate will stay above 6%. So, what can you do to lock in a lower rate and make your home loan more affordable?
- Improve your personal finances. “Ultimately, focusing on controllable factors, such as maintaining good credit, building savings, and reducing debt, is more effective than attempting to time decisions around market movements,” Vernon said.
- Shop for the best mortgage lender. Freddie Mac conducted research in October and November 2022, when mortgage rates were increasing nationwide. The research showed that borrowers who got rate quotes from two lenders could have saved $600 per year. Those who received at least four rate quotes could have saved over $1,200 annually.
- Consider which types of mortgage loans you qualify for. Freddie Mac tracks rates on 30-year and 15-year conforming conventional loans. If you need a jumbo loan, one that exceeds conforming loan limits, your rate might be higher. Government-backed loans, including FHA, VA, and USDA loans, usually charge lower mortgage rates. Find out if you qualify for any of these and compare the rates and fees between all options.
- Buy down your rate. Lenders give you the option to pay for discount points at closing, which permanently lower your mortgage rate. Some lenders offer temporary rate buydown programs. For a fee, you can pay a lower rate for one, two, or three years. Look at these options and their costs when shopping for a lender.
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