Fed Holds Rates Steady — What's Next for Homebuyers?
Well, the latest Federal Reserve meeting that took place May 6-7, 2025, is in the rearview mirror, and the Fed unanimously decided to leave the federal funds rate—the benchmark interest rate for overnight lending between U.S. banks—unchanged at 4.25% to 4.50%.1 By keeping rates steady, the Fed aims to balance economic growth while addressing concerns related to inflation, tariffs, and employment. Many potential homebuyers wonder how the Fed's decision might affect their homebuying power.
While the Federal Reserve does not directly set home mortgage rates, its monetary policy decisions, particularly regarding the federal funds rate, can influence mortgage rates. Following the announcement by the Fed on May 7 to maintain the current federal funds rate, home loans are still in the mid-6% range and a little higher.2 "With mortgage rates remaining relatively stable after the Fed's decision, homebuyers can enter the market without the pressure of rising borrowing costs," said Robert Odom, Ameris Mortgage Banking Executive at Ameris Bancorp.
In the week before the latest Federal Reserve meeting, homebuyers approached the market with increased confidence. The Mortgage Bankers Association (MBA) reported that mortgage applications increased 11% for the week ending May 2, 2025.3 Mr. Odom emphasized that this uptick is not an isolated incident. "At Ameris Bank, we've observed a steady rise in mortgage applications over the past several months," he said, adding, "Many potential buyers are optimistic about the housing market and believe now is an excellent time to purchase a home."
As we look ahead to the future of mortgage rates, attention turns to the Federal Reserve's meeting scheduled for June 17-18, 2025. If the Fed decides to pause or decrease interest rates, it could create favorable economic conditions that lead to lower mortgage rates. On the other hand, if the Fed raises rates, it may result in higher borrowing costs, including increased mortgage rates. Only time will tell, and Ameris Bank will keep you informed as developments unfold.
Sources:
1 https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-decision-may-2025-what-to-know-rcna204854#
2 https://www.zillow.com/mortgage-rates/
3 https://www.mba.org/news-and-research/newsroom/news/2025/05/07/mortgage-applications-increase-in-latest-mba-weekly-survey
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 is not affiliated with nor endorses NBC News, Zillow, or the Mortgage Bankers Association.
A Window of Opportunity
While the Federal Reserve does not directly set home mortgage rates, its monetary policy decisions, particularly regarding the federal funds rate, can influence mortgage rates. Following the announcement by the Fed on May 7 to maintain the current federal funds rate, home loans are still in the mid-6% range and a little higher.2 "With mortgage rates remaining relatively stable after the Fed's decision, homebuyers can enter the market without the pressure of rising borrowing costs," said Robert Odom, Ameris Mortgage Banking Executive at Ameris Bancorp.
Mortgage Applications Increase 11%
In the week before the latest Federal Reserve meeting, homebuyers approached the market with increased confidence. The Mortgage Bankers Association (MBA) reported that mortgage applications increased 11% for the week ending May 2, 2025.3 Mr. Odom emphasized that this uptick is not an isolated incident. "At Ameris Bank, we've observed a steady rise in mortgage applications over the past several months," he said, adding, "Many potential buyers are optimistic about the housing market and believe now is an excellent time to purchase a home."
What's Next for Mortgage Rates?
As we look ahead to the future of mortgage rates, attention turns to the Federal Reserve's meeting scheduled for June 17-18, 2025. If the Fed decides to pause or decrease interest rates, it could create favorable economic conditions that lead to lower mortgage rates. On the other hand, if the Fed raises rates, it may result in higher borrowing costs, including increased mortgage rates. Only time will tell, and Ameris Bank will keep you informed as developments unfold.Sources:
1 https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-decision-may-2025-what-to-know-rcna204854#
2 https://www.zillow.com/mortgage-rates/
3 https://www.mba.org/news-and-research/newsroom/news/2025/05/07/mortgage-applications-increase-in-latest-mba-weekly-survey
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 is not affiliated with nor endorses NBC News, Zillow, or the Mortgage Bankers Association.