Weekly Mortgage Rates Rise; Fed Votes to Freeze Rates

Mortgage rates rose this week as lenders steel themselves against a foggy economic future.

The Federal Reserve predictably voted to hold the federal funds rate steady during central bankers’ March 19 meeting and spoke of a need for more solid data before making policy shifts. Mortgage lenders, on the other hand, can be more reactionary when it comes to setting their own mortgage rates.

The 30-year fixed-rate mortgage rate averaged 6.8% in the week ending March 20, up 18 basis points from the previous week. A basis point is one one-hundredth of a percentage point.

In the hours leading up to the Federal Open Market Committee release, Federal Reserve watchers were nearly unanimous in their expectation that the Fed would vote to leave the federal funds rate unchanged at 4.25%-4.5%.

Chairman Powell opened the post-meeting press conference by affirming the relative strength of the economy, stating that it’s made “significant progress” toward the Fed’s goals over the past two years, both in terms of inflation and the labor market.

Powell acknowledged uncertainty about the potential impact of President Trump’s monetary agenda, with the big four areas to watch being tariffs, immigration, and fiscal and regulatory policy.

“While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their effects on the economic outlook is high,” Powell said.

Powell also underscored that the Fed does not feel the need to rush to react before further data comes in. However, Powell did speak to rising inflation, which he attributed “partly in response to tariffs.”

As for what this means for the Fed’s inflation goals, Powell said that there “may be a delay in further progress over the course of this next year.”

Powell also described recent survey data that showed both households and businesses expressing a “significant” rise in uncertainty and concerns about the future of the economy, though central bankers are more inclined to base their decision-making on hard economic data than consumer sentiment.

Most central bankers noted in their projections that the federal funds rate should fall below 4% this year, and could hover around 3% by 2027 — the same year they expect inflation to hit their goal rate of 2%.

Today’s home buyers face two major foes in their journey to homeownership: affordability and lack of available inventory. There haven’t been enough houses to go around, and both high interest rates and rising costs have priced some would-be buyers out of the market.

The first problem has a natural solution: build more houses. That’s growing more expensive as new tariffs drive up the cost of lumber and other building materials, and builders are only incentivized to apply for permits if they feel reasonably confident that these new homes will sell.

Data released on March 18 shows that new home construction permits fell 6.8% last month compared to February 2024.

This gives us a bleak window into the future for home shoppers. For one, we can expect fewer new homes to become available in the second half of 2025. And builders aren’t betting that borrowers will be able to afford what these new homes would cost.

There seemingly hasn’t been a “great” time to buy a house since mortgage rates bounced back from once-in-a-lifetime lows of the pandemic era. Avoid getting hung up on whether or not you’re getting an amazing deal and focus instead on making the right move for your financial circumstances.