In its first meeting of 2026, the Federal Reserve on Wednesday opted to keep interest rates unchanged — a decision that was expected but which comes amid political and financial uncertainty.
In a statement, the Fed explained that “available indicators suggest that economic activity has been expanding at a solid pace.” However, the statement also pointed to low job gains and inflation that “remains somewhat elevated.” As a result of the current economic landscape, the Fed ultimately “decided to maintain the target range for the federal funds rate at 3.5 to 3.75 percent,” the statement added.
The move was widely expected.
TAKE THE INMAN INTEL INDEX SURVEY
The Fed does not set mortgage rates, but its decision to either raise or lower its benchmark interest rate influences what it costs borrowers to take out loans for home purchases. As a result, the Fed’s moves are closely watched by housing experts and real estate professionals — many of whom have been hoping for years now that mortgages would become cheaper.
However, the Fed’s decision to stay the course on Wednesday suggests that change in the mortgage sector will only come gradually.
Mike Fratantoni
Responding to the Fed’s decision, Mike Fratantoni — a senior vice president and chief economist at the Mortgage Bankers Association — said Wednesday in a statement that the “MBA’s forecast has been for mortgage rates to remain in a relatively narrow trading range for the foreseeable future, likely remaining between 6 and 6.5 [percent] for 30-year conforming loans.”
“The news from this meeting does not change our forecast for mortgage rates,” Fratantoni added.
Also on Wednesday, the MBA reported that applications for home loans decreased last week by 8.5 percent relative to the week prior.
MBA Vice President and Deputy Chief Economist Joel Kan said in a statement that “mortgage rates increased for the first time in a month, and as expected, refinance applications fell by 16 percent. The 30-year fixed rate was the highest in three weeks at 6.24 percent.”
Joel Kan
But Kan did offer some hope, noting that conditions were also more favorable last week than they were a year ago at the same time.
“Purchase applications were 18 percent higher than last year’s pace, and the average loan size stayed at its highest level since September 2025, signaling that prospective homebuyers remain active at the start of 2026,” he added.
Rocket Mortgage Chief Business Officer Bill Banfield was also optimistic Wednesday, saying in a statement that “the housing market doesn’t turn on a single rate decision — it turns when people can plan with confidence.”
Bill Banfield
“Even without a cut today, mortgage rates are nearly a full percentage point lower than they were a year ago, when rates hovered around 6.9 percent,” Banfield added. “That kind of steady, year-over-year improvement is what builds buyer confidence and pulls people back into the market.”
Banfield also said that “buyers and homeowners have largely accepted that 5.5 percent to 6.5 percent is the new normal.”
Though the Fed’s decision didn’t make waves on Wednesday, a cloud of uncertainty nevertheless hangs over the agency. President Trump has spent his time in office criticizing Chair Jerome Powell, and the situation reached a crescendo earlier this month when the Justice Department served the Fed with grand jury subpoenas. The DOJ has also threatened to open a criminal indictment over Powell’s testimony in front of the Senate Banking Committee last summer.
The situation has raised questions about the Fed’s independence. Meanwhile, Trump has reportedly narrowed down the list of candidates to replace Powell to four people.
Trump’s feud with Powell and the Fed also comes as his White House battles with other national leaders, and embarks on an array of unorthodox foreign policy programs that have included tariffs, intervention in Venezuela, and the prospect of taking possession of Greenland.
