As the Fed Stands Pat, February Mortgage Rates Will Stand Still

Holden Lewis
By Holden Lewis 
Updated
Edited by Mary Makarushka

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February mortgage rate forecast

Everyone is impatient for mortgage rates to go down. Folks might have to wait at least another month because mortgage rates might not change much in February.

Market observers expect mortgage rates to fall this year, but not until the Federal Reserve signals that it's ready to relax monetary policy. The central bank didn't send that signal at the conclusion of its Jan. 30-31 meeting. As a result, mortgage rates might remain relatively unchanged until markets believe the Fed is about to loosen monetary policy by cutting the federal funds rate.

That rate cut could happen as soon as the next scheduled Fed meeting, which ends March 20. But the central bank has signaled that it's not in a hurry to cut rates. It might wait until the meeting that ends May 1, or maybe the one that ends June 12.

Lisa Sturtevant, chief economist for Bright MLS, a real estate database in the mid-Atlantic region, says a May 1 Fed rate cut seems the most likely scenario. That probably would influence mortgage rates to fall — but it won’t be the only factor influencing them. Rates could bounce higher, at least temporarily: "If rates start to fall and then we see more people coming into the market, and demand increases for those mortgages, that also can prop them up a little bit more than they might otherwise be allowed to fall," she says.

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