CHM Blog

Waiting out the storm

The Fed did what the Fed does when it isn't sure what to do: nothing. As in “much ado about…”

The Open Market Committee wrapped up its latest meeting with the federal funds rate right where it left it, holding steady in the 3.5% to 3.75% range. Given everything happening in the world right now, that may be the most honest response available.

A lot has shifted since the committee last met. Oil prices have surged more than 50% after armed conflict in Iran disrupted traffic through the Strait of Hormuz, one of the world's most critical shipping chokepoints. The Supreme Court blocked the administration's broad tariff authority, triggering a pivot to a different — and more time-limited — set of trade tools. Long-term interest rates, including the 10-year Treasury and mortgage rates, have bounced around but landed roughly where they were in late January.

The job market hasn't offered much clarity either. Hiring picked up in January, then softened in February. Inflation has been relatively stable, though that data predates the oil spike — meaning the next round of numbers could tell a different story.

Realtor.com chief economist Danielle Hale notes that the committee is caught between two legitimate concerns: keeping inflation in check and protecting the labor market. The tension isn't new, but it's sharper now. The vote to hold was not unanimous — Gov. Stephen Miran dissented, once again pushing for a cut.

This meeting also brought the Fed's updated economic projections, the first revision since December. Growth was nudged slightly higher. Unemployment held roughly steady. Inflation is still expected to ease gradually, though near-term forecasts for 2026 and 2027 were revised upward. The committee's median expectation remains a gradual drift toward a 3% policy rate over the next year or two.

For homebuyers, Hale says mortgage rates are likely to edge up this week — not because of the Fed, but because of the Middle East. Energy price shocks have a way of traveling fast. Even so, rates are expected to stay below year-ago levels, giving buyers a bit more purchasing power than they had last spring. That edge will matter most in parts of the West and South, where inventory in some markets has climbed back to pre-pandemic levels.

The Fed is doing what it can with what it has. In a world this unpredictable, sometimes holding the line is the move.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Lower

Mortgage rates are moving lower today. The MBS market worsened by -65 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Jobs, and 3) Treasury Auction.

1) Geopolitical: Everything you need to know about how the long bond market (particularly MBS) have reacted to the War in Iran is that we are down over 200 BPS since it started. The inflation, job and other data have taken a back seat to rising oil prices. This week will be no different.

2) Jobs: We will get the ADP 4 week rolling average and Initial Weekly Jobless Claims this week.

3) Treasury Auction: We have a round of shorter-term notes hitting the market with 2, 5 and 7 year note auctions.

This Week's Potential Volatility: High

This morning markets are curently bouncing back from last week's losses. Volatility has started very high and is likely to remain that way.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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