How the Federal Reserve Affects Mortgage Rates

The Federal Reserve is one of many influences on mortgage rates, along with inflation and economic growth.
Holden Lewis
By Holden Lewis 
Updated
Edited by Mary Makarushka
How the Federal Reserve Affects Mortgage Rates

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The Federal Reserve influences mortgage rates, but doesn't set them. At its May 1, 2024, meeting, the central bank kept the federal funds rate unchanged and acknowledged that inflation "remains elevated" despite the central bank's efforts to get it under control.

Mortgage rates are influenced by many elements, including the inflation rate, the pace of job creation, and whether the economy is growing or shrinking. The Federal Reserve's monetary policy is a factor, too, and is set by the Federal Open Market Committee.

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New American Funding - PURCHASE logo
Check Rate

on New American Funding

New American Funding

4.5

NerdWallet rating 
New American Funding - PURCHASE logo

4.5

NerdWallet rating 
Min. credit score 
500

Min. down payment 
3.5%

Check Rate

on New American Funding

NBKC - PURCHASE logo
Check Rate

on NBKC

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4.5

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NBKC - PURCHASE logo

4.5

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Min. credit score 
620

Min. down payment 
3%

Check Rate

on NBKC

Prosperity Home Mortgage - PURCHASE logo
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on Prosperity Home Mortgage

Prosperity Home Mortgage

4.0

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Prosperity Home Mortgage - PURCHASE logo

4.0

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Min. credit score 
580

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0%

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on Prosperity Home Mortgage