· Ronald Cepeda
The Fed doesn't set your mortgage rate directly — but its direction shapes the whole landscape.
Few topics generate more anxiety for buyers than interest rates. After the Federal Reserve cut its key rate three times to close out 2025 and held steady at its first meeting of 2026, many people are asking the same question: where do mortgage rates go from here?
First, an important clarification. The Federal Reserve doesn't set mortgage rates directly. Its decisions move the federal funds rate — what banks charge each other for overnight borrowing. Mortgage rates track more closely with the 10-year Treasury yield, which responds to inflation, economic growth, and global events. That's why mortgage rates sometimes move opposite to what a Fed decision might suggest.
The broad outlook calls for the Fed to continue trimming rates gradually through 2026, with projections pointing toward a lower federal funds rate over the next couple of years. But forecasters are careful to note that mortgage rates may not fall in lockstep — and importantly, no credible forecast predicts a return to the 3% rates of the pandemic era.
For buyers, the practical takeaway is this: trying to time the bottom of the market is a losing game. Rates could drift down, but they could just as easily tick up on an inflation surprise or a geopolitical shock. The cost of waiting — in rising home prices and lost equity — often outweighs the savings from a slightly lower rate that may never arrive.
A smarter strategy is to buy the home when it's right for your life and your budget, using tools like a 2-1 buydown or a future refinance to manage the rate. As the saying goes in our industry: marry the house, date the rate. If rates fall later, you refinance; if they don't, you still own an appreciating asset.
Nobody can predict exactly where rates will land, but you can build a plan that works in either direction. Let's look at today's numbers for your situation and put together a strategy that doesn't depend on guessing the future.