Sun Mar 23 04:40:00 UTC 2025: ## Mortgage Rates Jump as Fed Holds Steady, Housing Market Remains Bleak
**NEW YORK, March 21, 2025** – Mortgage rates climbed this week, reaching an average of 6.8% for a 30-year fixed-rate mortgage, an increase of 18 basis points. This rise comes despite the Federal Reserve’s decision to hold the federal funds rate unchanged at 4.25%-4.5%, a move widely anticipated by market watchers.
While the Fed cited a strong economy and progress towards inflation goals, Chair Jerome Powell acknowledged uncertainty surrounding President Trump’s economic policies and rising inflation, partly attributed to tariffs. Powell emphasized the Fed’s preference for waiting for further data before making policy adjustments. The Fed’s projections suggest interest rates could fall below 4% this year and approach 3% by 2027.
The increase in mortgage rates, however, adds to the challenges already facing prospective homebuyers. Limited housing inventory and high prices are already making homeownership difficult. The situation is further exacerbated by a decline in new home construction permits, down 6.8% in February 2024, indicating a likely shortage of new homes in the latter half of 2025. Builders are hesitant to increase construction due to the high cost of materials and uncertainty about buyer demand.
Experts advise homebuyers to prioritize their financial situation over timing the market. While tracking weekly trends is helpful, finding a suitable home that fits their budget should be the main focus. The current market presents significant affordability challenges, and there appears to be no easy solution on the horizon.
First Piper 