Fed leaves rates unchanged. Again.
What happened:
Citing recent inflation data, the two-day May meeting of the Federal Open Market Committee (FOMC) resulted in the Fed leaving interest rates unchanged for the sixth straight meeting, maintaining them in the 5.25% to 5.5% range.
Speaking on the matter at a press conference, Fed Chairman Jerome Powell said, “Inflation is still too high, further progress in bringing it down is not assured, and the path forward is uncertain. We are fully committed to returning inflation to our 2% goal.”
What it means:
This news came as no surprise to industry experts and economists, who did not expect a change from the previous five meetings. Chairman Jerome did signal that a rate hike in the near future was "unlikely," which had an immediate positive effect on Wall Street, with the DOW surging 400 points.
For the housing market, however, it would appear that the status quo will continue for the time being, potentially casting a shadow over 2024's Summer Selling Season, which historically sees an increase during the warmer months of the year. A rate reduction may yet be in the future, though it is unlikely to occur until later in 2024.
How this affects homeownership:
Though they are linked, the interest rates set — or in this case maintained — by the Fed do not have a 1:1 correlation with mortgage rates. The announcement today will likely not change the landscape for homebuyers in the foreseeable future.
This news further supports the axiom of "date the rate, but marry the house," since homeownership is often seen as a long-term endeavor. Entry-level interest rates play less of a role in overall importance due to the opportunities for refinancing when rates inevitably come down. Rather than deferring those homeowning aspirations to a later date, it's important to seek out a loan officer and work towards mortgage pre-approval status now to see where your path towards homeownership takes you.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.