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With inflation steadily trending up since September, the Federal Reserve opted to hold steady on its federal funds rate in its most recent meeting. Unfortunately, that’s meant little improvement in terms of mortgage rates.
In fact, the average 30-year rate now sits at nearly 7%, according to Freddie Mac — a far cry from the 6.08% rate we saw in early September as the Fed prepared for its first rate cut in years.
The Fed has a break until March, though, leaving many wondering where rates will head in the meantime. So will mortgage rates continue to hover around 7%, or is there a chance that borrowers see some relief in the off period? Here’s what experts say to expect in terms of mortgage rates for February.
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Will mortgage interest rates fall in February without a Fed meeting?
Before diving into the mortgage rate forecast for February, it’s important to note that the Federal Reserve’s moves are only one factor in where mortgage rates (and all interest rates, for that matter) head. According to Evan Luchaco, a home loan specialist at Churchill Mortgage, what’s even more important is the data the Fed bases its decisions on.
“The Fed uses reports like the Bureau of Labor Statistics jobs report for reviewing new job creation figures, the unemployment rate, the Consumer Price Index, and the Personal Consumer Expenditure reports to provide guidance on future actions,” Luchaco says. “These reports come out every month, whether the Fed meets or not.”
Other economic factors play in, too. Inflation, for instance, is a big influencer, as are the 10-year Treasury yield and investments into mortgage-backed securities. And right now, the policies of the newly installed presidential administration — including proposed trade tariffs — are in the mix, too.
“The main driver of rates seems to be what will happen with the Trump tariffs,” says Kevin Leibowitz, a mortgage broker with Grayton Mortgage. “Will the tariffs be inflationary? Will the tariffs be short-lived? Time will tell.”
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What the experts predict for February
If you look at the biggest industry forecasts, analysts predict that mortgage rates will either hold steady or drop slightly in the near term. Fannie Mae currently predicts that the average 30-year mortgage rate will end the first quarter at around 6.7%, while the Mortgage Bankers Association predicts a much higher 7%.
“I expect to see moderate movement in the market over the coming months, likely with a slow but steady decline in rates,” Luchaco says.
Darren Tooley, a loan officer at Union Home Mortgage, said he expects some “positivity” on the mortgage rate front this month.
“Depending what happens with this month’s reports on the state of economy — specifically the unemployment rate and inflation rate, it’s realistic that we could see rates drop by 0.25% or more before the next Fed meeting,” Tooley says.
This would put the average 30-year rate around 6.64%, according to Freddie Mac’s most recent numbers.
What’s next for mortgage rates
Beyond February, most experts predict a slow but steady downtrend in rates. Both Fannie Mae and MBA project that mortgage rates will end the year near a 6.5% average.
“As a general trend, I believe we will see rates steadily decline over the coming 12 to 24 months, with rates likely to settle in the low 6% range by the end of the year,” Luchaco says. “Historically, the national average for a conventional 30-year fixed-rate loan is about 5.5%, and I think that’s a realistic target to see by the end of 2026.”
Of course, there’s no way to predict the future, but the CME Group’s Fed Watch Tool currently shows decent chances of Fed rate cuts at the bank’s summer meetings, which would likely push down mortgage rates as well.
“I don’t think we’re in an environment where the Fed would consider raising the Fed funds rate,” Luchacho says.
It will all depend on where the economy heads, though — and how recent and upcoming policy changes will trickle down.
“The recent run-up in rates has been in anticipation of what will happen under the Trump presidency,” Leibowitz says. “Well, now it’s here, and now we will find out.”
The bottom line
Despite potential rate drops on the horizon, waiting on the sidelines isn’t always the best move. In many markets, waiting for mortgage rates to fall could actually mean paying a higher price for your house, as lower rates will likely spur more demand from homebuyers. If you’re on the fence about buying a house right now, talk to a mortgage professional and local real estate agent about your options. They can run the numbers and help you weigh the pros and cons of buying now versus waiting.
