Still Waiting for Lower Interest Rates? The Fed Chair Just Sent a Different Message

A recent speech by Federal Reserve Chair Jerome Powell has sent a strong signal to buyers: the long-awaited return of 3% mortgage rates may not happen anytime soon.

Speaking at a conference in Washington, D.C., Powell explained that the Fed’s long-term outlook for interest rates has shifted upward. Unless a recession occurs, returning to near-zero rates like we saw in the past is unlikely. He also noted that inflation is expected to remain volatile, which will influence rate policy.

This has direct implications for mortgage rates. When the Fed keeps rates high for an extended period, long-term Treasury yields rise—pushing mortgage rates up as well. In fact, recent increases in the 10-year Treasury yield have brought the average 30-year fixed mortgage rate up to 6.76%.

According to Realtor.com’s Chief Economist, rates are expected to remain in the 6.2%–6.7% range in the near term, and a sharp drop is unlikely. In short, we are entering a “new normal,” and it’s time to adjust expectations.

What Should Buyers Do in This Market?

Rather than waiting for the perfect rate, buyers should focus on understanding today’s conditions and building a strategic plan. Here’s why:

• Inventory is rising in some areas of Chicago and Illinois, giving buyers more negotiating power and greater chances of receiving seller incentives like closing cost support or temporary interest rate buy-downs.

• Home prices are still climbing, with Chicago suburbs seeing 4–5% annual appreciation on average. Waiting may mean paying more for the same home later.

• Holding out for a lower rate might backfire. If rates stay the same or edge up slightly—and prices continue to rise—you could end up buying at a higher price with the same interest rate later.

Conclusion

While the economy remains uncertain, the housing market is finding a new balance. The Fed’s latest signals clearly suggest we won’t be returning to ultra-low rates any time soon. That’s why now may be the most important time for buyers to act.

Instead of waiting, work with an expert to build a personalized buying strategy. From analyzing your financial situation to negotiating for rate buydowns and incentives, I’m here to help you buy smart in today’s market.

Contact: Hans Han – Chicago BDB

📞 773-717-2227 | 📧 ChicagoBDB@gmail.com