The Federal Reserve has decided to maintain its key interest rate, signaling its efforts to control inflation. Meanwhile, mortgage applications have declined due to rising mortgage rates.
Federal Reserve Holds Interest Rates Steady
The Federal Reserve has made the decision to maintain its key interest rate at a range of 5.25% to 5.50%. This move is in line with the central bank’s efforts to control inflation by keeping borrowing costs high for various forms of credit.
( Credit to: Investopedia )
Chair Jerome Powell stated during a press conference that recent inflation reports have not changed the overall story of inflation gradually moving down towards the target rate of 2%. This decision reflects the central bank’s confidence in its gradual approach towards achieving the desired inflation rate.
Mortgage Applications Decline
The Mortgage Bankers Association (MBA) has reported a dip in home loan applications, with the MBA Market Composite Index showing a decline of 1.6% for the week ending March 15. This decrease can be attributed to the rise in mortgage rates, with the average 30-year fixed-rate mortgage reaching 6.97%.
Joel Kan, MBA Vice President and Deputy Chief Economist, explained that the increase in mortgage rates was driven by higher-than-expected inflation data. This raised concerns about the Federal Reserve’s ability to lower interest rates this year, leading to lower levels of both new purchase and refinancing applications.
The decline in mortgage applications, influenced by rising mortgage rates, indicates a potential slowdown in the housing market as potential homebuyers adjust to the changing interest rate environment.
