The Federal Reserve’s Federal Open Market Committee (FOMC) held interest rates steady at 3.5% to 3.75% on Jan. 28.
“Available indicators suggest that economic activity has been expanding at a solid pace,” the FOMC wrote in a statement. “Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.”
This decision came after three 25 basis point cuts in the federal funds rate in three consecutive FOMC meetings in September, October and December.
Related: Redfin forecasts mortgage rates change
Chen Zhao, the head of economics research at the real estate technology company Redfin, offered a prediction about what to expect in the next few months for mortgage rates.
“Mortgage rates will stay where they are as the Fed keeps rates unchanged, as anticipated,” Zhao wrote. “The Fed said it doesn’t expect to resume cuts for the foreseeable future, as they don’t see a reason to do so.”
“After cutting the Fed Funds rate by 75 bps in Q4, the Fed will likely hold rates steady until at least this summer as they wait for more economic data,” she continued.
“Mortgage rates are unlikely to change much.”
Redfin examines interest rates, recession probability
The Fed’s benchmark rate is now hovering near what economists consider the neutral level — the point at which monetary policy isn’t pushing growth forward or holding it back, according to Redfin.
That means the central bank has limited space for additional cuts unless the data clearly points toward an economic downturn.
And with the economy poised to get a boost from last year’s tax cuts, a recession doesn’t look especially likely in the near term, Redfin assessed.
“The risk of a recession has fallen since last year,” Zhao wrote. “At the same time, the risk of higher inflation has also fallen. That means Fed policy this year is likely to hold rates where they are.”
“The real action around the Fed is its fight for independence, and who the next Fed chair will be,” she continued. “But we learned little about those issues today.”
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Fed bank explains interest rate, mortgage rate relationship
One question economists often highlight involves the belief that interest rates are tied to mortgage rates.
“A time-honored, but flawed, assumption about the relationship between mortgage rates and interest rates has been turned on its head as the two have moved in opposite directions following the Federal Reserve’s interest rate cuts over the past year,” wrote the Federal Reserve Bank of Atlanta.
More on mortgages, housing market:
- Zillow sounds alarm mortgage rates, housing market
- Berkshire Hathaway HomeServices predicts housing market pivot
- Redfin sends strong message on mortgage rates
Kris Gerardi and Domonic Purviance of the Atlanta Fed explained their view that the presumed connection between mortgage rates and the federal funds rate is a misconception.
“For the past 20 years, mortgage rates have been more closely associated with the interest paid on 10-year Treasury notes than with the fed funds rate set by the FOMC,” they said, according to the Federal Reserve Bank of Atlanta.
“While mortgage rates do, typically, move fairly closely with short-term interest rates like the fed funds rate, they are more strongly linked to longer-term rates such as the 10- or 20-year Treasury yield,” Gerardi said. “This is because the average life of a mortgage is around seven to 10 years.”
Interest rates, the 10-year Treasury yield, mortgage rates
- Between September 2024 and January 2025, the 10‑year Treasury yield climbed by roughly 90 basis points, even though the federal funds rate fell by about 80 basis points over the same span. (Source: Federal Reserve Bank of Atlanta)
- Data from Freddie Mac provides a detailed look at the pattern Kris Gerardi of the Federal Reserce Bank of Atlanta highlighted and indicates that the same upward movement persisted following the Sept. 2025 rate cut. (Source: Federal Reserve Bank of Atlanta)
- After the Fed’s half‑point reduction in September 2024 — its first cut since 2020 — mortgage rates moved from 6.09 percent to 6.84 percent between Sept. 19 and Nov. 21, before eventually easing. (Source: Federal Reserve Bank of Atlanta)
- The Fed implemented two additional cuts later in 2024 and then kept rates unchanged until Sept. 2025. (Source: Federal Reserve Bank of Atlanta)
- When the Fed lowered rates by a quarter‑point in September 2025, mortgage rates again edged higher, rising from 6.26 percent on September 18 to 6.34 percent by Oct. 2, after which they began to recede. (Source: Federal Reserve Bank of Atlanta)
Freddie Mac reports weekly mortgage rate
Freddie Mac released the results of its Primary Mortgage Market Survey on Jan. 22.
“The 30-year FRM (fixed-rate mortgage) averaged 6.09% as of Jan. 22, 2026, up from last week when it averaged 6.06%. A year ago at this time, the 30-year FRM averaged 6.96%,” according to Freddie Mac.
“The 15-year FRM averaged 5.44%, up from last week when it averaged 5.38%. A year ago at this time, the 15-year FRM averaged 6.16%,” Freddie Mac added.
Freddie Mac’s chief economist Sam Khater offered some advice for home buyers.
“With the economy improving and the average 30-year fixed-rate mortgage nearly a percentage point lower than last year, more homebuyers are entering the market,” Khater said.
“Buyers always should shop around for the best rate, as multiple quotes can potentially save them thousands.”
Related: Zillow forecasts big mortgage change for U.S. housing market
