Mortgage rate outlook shifts after Fed decision

The Federal Reserve has officially concluded its fourth meeting of the year - and its first with Chairman Kevin Warsh at the helm.

Despite the leadership change, though - and Warsh's notably more dovish economic stance than his predecessor Jerome Powell - it seems the Fed is staying the course.

At least for now.

What the Fed's rate decision and where it's going next

The Fed voted to keep its federal funds rate steady, Warsh announced in a post-meeting press conference on June 17.

The move was largely expected by markets. In fact, the CME Group's FedWatch tool put the odds of a rate cut at less than 1% going into the meeting.

With inflation jumping to 4.2% last month - its highest level in over three years, holding rates steady isn't too surprising. After all, higher interest rates quell borrowing, which quells spending and keeps inflation in check.

In the press conference, one attending reporter even asked why a rate hike wasn't on the table, given recent inflation data.

"You've said repeatedly that credibility requires delivering," said Nick Timiraos, chief economics correspondent for The Wall Street Journal. "If credibility requires delivering, the move would be to tighten - or at least to threaten to. You didn't do that today. Why not?"

To which Warsh responded, "That judgment you expressed was not expressed by any of the 19 people around the table. We'll be meeting in six weeks and we'll take up the issue again."

Related: Fannie Mae predicts mortgage rate change

In short, a rate hike is still possible down the line. In the Fed's Summary of Economic Projections - which Warsh questioned the validity of in his press conference - nine members of the Federal Open Market Committee indicated they expect a rate hike will be necessary by the end of the year. Some had multiple hikes penciled in.

But that could be the last indication we get out of the Fed for a while, which is officially ending all "forward guidance" from here on out, according to Warsh. The new Fed chair also said he's forming five task forces, which will "propose some well-considered changes, including to the SEP."

"New Fed Chair Warsh said the Fed is eliminating forward guidance on rate policy, because markets should trade on the employment and inflation data they receive, not on how the Fed interprets that data," says Jeff Taylor, managing director of mortgage platform Mphasis Digital Risk and a board member of the Mortgage Bankers Association.

Chip Somodevilla / Getty Images

Where mortgage rates are headed next

It's important to remember that the Fed's rate isn't a rate consumers will actually see. While it is the basis for many interest rates, especially those on credit cards and variable-rate loans, it has less of an impact on longer-term, fixed-rate products, like mortgages.

Those are more influenced by inflation data, bond markets, and investment activity. They tend to closely follow the 10-year Treasury yield instead.

That's not to say the Fed's move will have no impact on mortgage rates. But it's not as simple as, "the Fed held rates steady, so mortgage rates will hold steady, too."

In my 10-plus years of covering mortgages, I've often noticed that it's the commentary that comes out of the Fed meetings that has the most impact, since it influences investment activity and what markets anticipate is coming down the pike. If investors expect inflation will drop and the Fed might lower its rate, then mortgage rates could fall. If they expect the opposite, it could mean higher mortgage rates instead.

Take the FedWatch Tool, for example, which showed a notable bump in the chances of a July rate cut in the hours following Warsh's statements. The day before, there was just an 8.5% probability of a rate hike. By 4 p.m. on June 17, though - just hours after Warsh's press conference, the chance had jumped to 32%.

"Mortgage rates may rise slightly from 6.625% to 6.75% as Warsh takes over," Taylor says. "If 3.3% Core PCE inflation goes higher this year, rates could rise more."

More Fed:

• Warsh's first Fed meeting resets interest rate-cut bets
• Hot May CPI sticks a pin in Fed rate-cut bets
• Goldman Sachs sends strong message on next Fed rate cut

For now, we have some guidance as to where rates could head thanks to the Fed's SEP. But things get murky the further you get out, particularly with Warsh eliminating all forward-thinking guidance and calling the SEP's future into question.

As of now, though, any notable drops in mortgage rates aren't looking likely. And until data indicates otherwise, borrowers can expect rates to stay in the mid-6% range or higher.

"Regardless of Fed action, mortgage rates are unlikely to fall meaningfully until inflation cools and long-term yields move decisively lower," says Selma Hepp, chief economist at real estate data platform Cotality.

Related: Mortgage rate bets shift after surprising jobs report

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This story was originally published June 18, 2026 at 4:03 AM.