Mortgage Demand Rises as Fed Keeps Rates Steady
Mortgage demand has seen a noticeable increase as potential homebuyers and real estate investors look to move forward with their purchases. As of June 11, 2025, the number of home mortgage applications increased by 10% for the week and were 20% higher the same week one year ago.1 This uptick in interest comes at a crucial time as the Federal Reserve has decided to keep the federal funds rate unchanged at 4.25%–4.50% for a fourth consecutive meeting, which took place June 17-18, 2025.2
The Federal Reserve’s decision to hold interest rates steady appears to be fostering cautious optimism among prospective homebuyers. While the federal funds rate doesn’t directly determine mortgage rates, it influences the broader interest rate environment, including the cost of borrowing for home loans.
“As the federal funds rate remains stable, many are optimistic about securing home loans, which could lead to a boost in home sales in the summer months,” said Brett Hively, Senior Vice President and Mortgage Capital Markets and Financial Strategist at Ameris Bank.
This was also seen in May, as pending home sales increased by 1.8% in May from the prior month and 1.1% year-over-year, according to the National Association of REALTORS® Pending Home Sales report.3
As of June 25, the average rate for a 30-year fixed conforming mortgage was 6.72%, a modest decline of 0.08 percentage points from the previous week.4 The slight downward movement—combined with the Fed’s steady stance—may be encouraging buyers who had previously paused their plans.
“Rate stability can help reduce uncertainty, allowing buyers to better plan their budgets and timelines,” Hively said. “In a market where affordability remains a concern, even small rate improvements can make a difference in monthly payments and overall purchasing power.”
Beyond the policies established by the Federal Reserve, several factors influence fluctuations in home mortgage interest rates. These include economic conditions, employment rates, geopolitical events, tariff impacts, and shifts in housing supply and demand.
“Although it's difficult to predict which way mortgage rates are headed, lower inflation and steady growth could create conditions for modest rate reductions,” said Mr. Hively. “That would support continued demand in the housing market.”
While the Fed held rates steady in June, the Federal Open Market Committee has indicated the possibility of two rate cuts before the end of 2025.5 The next Fed meeting is scheduled for July 29–30.
Sources:
1 https://www.cnbc.com/2025/06/11/mortgage-demand-rises-to-the-highest-level-in-over-a-month.html
2 https://www.federalreserve.gov/newsevents/pressreleases/monetary20250618a.htm
3 https://www.nar.realtor/newsroom/nar-pending-home-sales-report-reveals-1-8-increase-in-may
4 https://www2.optimalblue.com/obmmi
5 https://www.cnbc.com/2025/06/18/fed-rate-decision-june-2025-.html
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.
Signs of growing optimism
The Federal Reserve’s decision to hold interest rates steady appears to be fostering cautious optimism among prospective homebuyers. While the federal funds rate doesn’t directly determine mortgage rates, it influences the broader interest rate environment, including the cost of borrowing for home loans.“As the federal funds rate remains stable, many are optimistic about securing home loans, which could lead to a boost in home sales in the summer months,” said Brett Hively, Senior Vice President and Mortgage Capital Markets and Financial Strategist at Ameris Bank.
This was also seen in May, as pending home sales increased by 1.8% in May from the prior month and 1.1% year-over-year, according to the National Association of REALTORS® Pending Home Sales report.3
As of June 25, the average rate for a 30-year fixed conforming mortgage was 6.72%, a modest decline of 0.08 percentage points from the previous week.4 The slight downward movement—combined with the Fed’s steady stance—may be encouraging buyers who had previously paused their plans.
“Rate stability can help reduce uncertainty, allowing buyers to better plan their budgets and timelines,” Hively said. “In a market where affordability remains a concern, even small rate improvements can make a difference in monthly payments and overall purchasing power.”
Factors Influencing Mortgage Rates
Beyond the policies established by the Federal Reserve, several factors influence fluctuations in home mortgage interest rates. These include economic conditions, employment rates, geopolitical events, tariff impacts, and shifts in housing supply and demand.“Although it's difficult to predict which way mortgage rates are headed, lower inflation and steady growth could create conditions for modest rate reductions,” said Mr. Hively. “That would support continued demand in the housing market.”
Fed Signals Possible Rate Cuts Ahead
While the Fed held rates steady in June, the Federal Open Market Committee has indicated the possibility of two rate cuts before the end of 2025.5 The next Fed meeting is scheduled for July 29–30.Sources:
1 https://www.cnbc.com/2025/06/11/mortgage-demand-rises-to-the-highest-level-in-over-a-month.html
2 https://www.federalreserve.gov/newsevents/pressreleases/monetary20250618a.htm
3 https://www.nar.realtor/newsroom/nar-pending-home-sales-report-reveals-1-8-increase-in-may
4 https://www2.optimalblue.com/obmmi
5 https://www.cnbc.com/2025/06/18/fed-rate-decision-june-2025-.html
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.