Mortgage Rates Stay High Amid Fed’s Conservative Rate Outlook

Despite cooling inflation, average 30-year mortgage rates remain above 7%, with the Fed unlikely to deliver a rate cut at its upcoming meetings. Here’s what Boston buyers need to know.

Mortgage Rates Hold Steady Amid Fed’s Rate Strategy

The December Producer Price Index (PPI) and Consumer Price Index (CPI) reports offered some welcome relief to the bond market, which has struggled under pressure from the Federal Reserve’s updated “dot plot” forecasts and a stronger-than-expected December jobs report. While these economic indicators signal progress on inflation, the Fed has signaled no urgency to implement further rate cuts in the near term.

As a result, average 30-year fixed mortgage rates remain above 7%, according to Mortgage News Daily. For Boston buyers, this continued rate pressure poses challenges, especially as the spring housing market approaches.

What’s Next for Mortgage Rates?

The Fed Funds Rate futures market offers insight into where rates might head next:

• January 29 FOMC Meeting: There’s a 97% probability that the Fed will keep the current policy range at 4.25–4.50%, with only a 3% chance of an additional 25 basis point cut.
• March 19 FOMC Meeting: The market predicts a 68% likelihood that rates will remain unchanged. However, there’s a 31% chance of a 25 basis point cut, which would lower the range to 4.00–4.25%.

The Fed’s caution reflects its focus on ensuring inflation remains under control. While this strategy benefits the broader economy, Boston buyers should prepare for mortgage rates to stay elevated for the foreseeable future.

What Does This Mean for Boston Buyers and Sellers?

For prospective buyers in Boston, higher mortgage rates can significantly impact affordability, particularly in a market where home prices remain strong. Sellers may need to adjust their expectations, as elevated rates could slow transaction activity.

That said, local conditions in Boston often diverge from national trends. Inventory levels are improving, and buyers could see more opportunities as the spring market kicks off.

As your trusted real estate advisor, I’m here to help you navigate Boston’s competitive market and make informed decisions. Whether you’re buying or selling, let’s connect to strategize for success in 2025.