February Mortgage Outlook: At Least Mortgage Rates Are Calm

With the overall economy on relatively stable footing, mortgage interest rates aren't likely to see much action in February. It would take major market movements to send rates significantly higher or lower.

Why stability's likely

Here's why mortgage rates will probably be flat in February.

The U.S. economy is doing pretty well on paper, even if that's not how it feels to many Americans. December saw the labor market adding fewer jobs than expected, though unemployment eased up a bit, at least. And while it's still above the Federal Reserve's 2% target, inflation has remained in line with expectations.

At their Jan. 27-28 meeting the Federal Reserve opted to maintain the federal funds rate's current level. The Fed had a three-meeting streak of rate cuts going at the end of 2025, brought on by concerns about the labor market. When it seems like employers are struggling, the central bankers tend to lower interest rates in order to boost borrowing (and hiring).

The Fed felt good enough about the job market to pause its rate cuts last month. Good enough, in fact, to remove language about rising risks to employment from its official statement. That sounds super mild, but trust me, it's a significant vote of confidence — even if many of us are a lot less confident.

A stable economy and a Federal Reserve that's in wait-and-see mode is a recipe for mortgage rates to remain steady. Average 30-year mortgage rates have stayed within a pretty limited range — just over 6% — for a few months now, so really we're expecting to see more of the same.

Fed shakeup could rattle markets

That's the official read on the Federal Reserve, a group that we usually don't hear too much about outside of its meetings. But recently, the Fed has been in the news virtually nonstop. Fed intrigue could influence mortgage rates, though probably not in a direct or immediate way.

On Jan. 30, President Trump announced Kevin Warsh as his pick for the next chair of the nation's central bank. A former Wall Street insider who served as a Fed governor from 2006 to 2011, Warsh called for "regime change" at the Federal Reserve last summer, citing the central bankers' hesitancy to cut rates. (Warsh made those remarks in July 2025; the Fed did go on to cut rates three times that year.)

Current chair Jerome Powell's term doesn't end until May, and Warsh's appointment needs to be confirmed by the Senate. The latter is not a foregone conclusion, as many senators are on high alert over the administration's criminal investigation of Powell, which has raised concerns about the Fed's continued independence. Sen. Thom Tillis, R-N.C., a member of the Senate Banking Committee, has vowed to oppose any Trump nominee until the Powell investigation is resolved.

In a social media post the morning the nomination was announced, Tillis praised Warsh but said "Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable." If all of the other senators on the Banking Committee vote along party lines and Tillis sides with the Democrats, Warsh's nomination could fail to advance to the full Senate.

Again, any nominee wouldn't take the reins until May. But in the meantime, if drama around the nomination or continued developments in the Powell probe start to roil the markets, we'll see that ripple out to mortgage rates.

What other forecasters are predicting

Freddie Mac's weekly mortgage rate survey averaged 6.1% in January, and that's right in line with expert forecasts. Last month, Fannie Mae lowered their Q1 expectations by a tenth of a percentage point. Fannie Mae also now predicts flat rather than falling rates through the end of the year. The Mortgage Bankers Association likewise lowered their predictions for all of 2026, though it's still forecasting stable mortgage interest rates.

What happened in January

Our January prediction sounded a lot like this month's: While there was the possibility rates could fall, they were more likely to hold steady. Rates actually ended up lower overall, though most of that downward movement came from one significant drop. On Jan. 8, President Trump called for the purchase of $200 billion in mortgage-backed securities. The president's social media post had limited details, but it was enough to suddenly send mortgage rates to their lowest levels in over three years.

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Kate Wood writes for NerdWallet. Email: [email protected].

The article February Mortgage Outlook: At Least Mortgage Rates Are Calm originally appeared on NerdWallet.