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 June 12, 2024, meeting, the central bank kept the federal funds rate unchanged and said that inflation "has eased over the past year but remains elevated." It left the door open to interest rate cuts this year, which could deliver relief for mortgage rates.

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

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4.5

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New American Funding - PURCHASE logo

4.5

NerdWallet rating 
Min. credit score 
500

Min. down payment 
3.5%

Check Rate

on New American Funding

Better - PURCHASE logo
Check Rate

on Better

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4.5

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Better - PURCHASE logo

4.5

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Min. credit score 
620

Min. down payment 
3%

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on Better

NBKC - PURCHASE logo
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NBKC - PURCHASE logo

4.5

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Min. credit score 
620

Min. down payment 
3%

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