The Fed has given some hope to homebuyers by declining to raise the federal funds rate, a key overnight bank lending rate, at its June meeting. Although the Fed rate and mortgage rates move independently, the same market factors drive the rate increases and cuts.
Inflation, job growth and the overall economic outlook impact lenders and how they set rates. A steady Fed rate should translate to fewer increases in mortgage rates. However, availability and affordability may still be obstacles when shopping for a home. In its official statement, the Federal Open Market Committee (FOMC) said, "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," and that "the Committee remains highly attentive to inflation risks." Although the statement did also say that: "The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year."
