After the latest report revealed that inflation remains high at 3.4% — and after the May Consumer Price Index All Urban Consumers report showed a 0.3% increase in April — the Federal Reserve elected to hold the federal funds rate steady for the sixth consecutive meeting. This, in turn, further delayed the anticipated rate cuts that had, at one point, been expected to occur in mid-2024.

While the Federal Reserve doesn’t directly set mortgage rates, the rates offered by lenders tend to follow the agency’s lead. As such, mortgage rates remain elevated, and once again have climbed over the 7% mark on average, with the 30-year fixed-rate mortgage rate averaging 7.18% as of June 4, 2024.

The Fed’s next meeting is set for June 11 and 12, and many potential borrowers are hopeful that a rate cut occur, followed by a drop to mortgage rates. Late last year, the agency hinted at multiple rate cuts in 2024, but persistent inflation has delayed such cuts. So, any rate drop would be welcome news for potential homebuyers looking for lower borrowing costs.

“It is widely expected that the Federal Reserve will keep rates unchanged at this month’s meeting. While this decision is expected, markets eagerly anticipate what the Fed’s new dot plot and summary of economic projections will reveal.

Markets currently anticipate one cut this year, so if the Fed keeps three cuts on the table, we should see a small improvement in mortgage rates. However, if the Fed were to match market expectations, then mortgage rates should remain relatively unchanged.”

~Emily Overton, capital markets analyst 

The bottom line 

The consensus among these experts suggests the Federal Reserve is likely to keep the federal funds rate where it is, but it could lower rates later in the year. Consequently, mortgage rates are likely to stay in the current 7% range, with little room to drop much lower, at least in the near future, experts say.

“If a prospective buyer is looking to buy a home this year, waiting for lower rates may not necessarily result in more savings as rates are likely to hover near current levels,” says Overton. “For a seller, waiting for home prices to rise may also not be a feasible option because we haven’t seen a huge uptick in buying activity, and recent data suggests home prices may have peaked as delistings and price drops are increasing.”

Mac Church is in the top 1% in the Nation for Mortgage production and a 6 time winner as Best of the Burg’s Best Mortgage Lender