Fed Holds Rates Steady. Three Voters Preferred a Hike.

In short: A divided Federal Reserve held rates steady, but three policymakers pushed for a hike. With mortgage rates expected to fall only to 6.4% by year-end, the affordability tailwind buyers felt in the first half of 2026 may soon become a headwind.

What’s next for rates?

The Committee held the federal funds rate at 3.5%–3.75%, with nine voters favoring a hold and three favoring a hike — the first time three voters have dissented in the same direction since 2016. The bias of the next move is a hike. 

Zillow expects mortgage rates to ease only gradually, drifting to roughly 6.4% by the end of 2026.

What’s the impact on housing? 

Mortgage rates are slightly lower than a year ago, but that boost to housing activity may not last much longer. Although rates are expected to decline from today’s levels, a year-end rate of 6.4% would be slightly higher than the range buyers encountered in the fall and winter of 2025. That would erode recent affordability gains and make it harder for listings and sales to remain above year-ago levels.

In most of the country, wage growth has outpaced home-value growth, which has helped improve affordability, independent of borrowing costs. Still, rising prices of everyday goods and services have eaten into those gains, limiting how much buyers can comfortably spend on a home.