While the Federal Reserve may not directly dictate mortgage rates, the Fed policy has a swift and direct impact on how mortgage rates fare now and over the long term. As a housing market professional, it’s imperative that you keep an eye on Fed policy to know what to anticipate with mortgage rates — and that’s especially true in 2023, as the Federal Reserve’s anticipated rate hikes are likely to continue to cause swings in mortgage rates through at least the first half of the year.

The most recent Fed rate hike indicated that the upcoming rate hikes may not be as drastic as they were throughout 2022, but the inflation rate will play a large part in what the Fed decides to do in the future. After inflation slowed more rapidly than expected in November, the Federal Reserve raised the federal funds rate by 50 basis points in December 2022 to 4.25%-4.50%. That was a smaller interest rate hike than the 75 bps per meeting the Fed policymakers had stuck to since June 2022, but what will happen with mortgage rates throughout 2023 remains to be seen.

As the Fed continues to try and slow inflation via regular rate hikes, you can stay informed on what’s happening with the Fed policy through news updates and more on HousingWire.