Redfin predicts key real estate, mortgage rates change

A couple of economic and policy factors are currently influencing real estate industry opinion leaders' predictions for the near future — especially regarding mortage rate changes.

For one, President Doland Trump recently announced that he has instructed the federal government to purchase an additional $200 billion in mortgage‑backed securities (MBS) beyond usual levels.

"Mortgage-backed securities are bonds with cash flows tied to the principal and interest payments on a pool of underlying mortgages," according to the Federal Reserve Bank of New York.

Trump argued on social media that this move would help push mortgage rates lower and ease the nation’s housing affordability problems.

Related: Redfin has key 2026 housing market prediction for real estate

The money for these purchases would come from Fannie Mae and Freddie Mac, the government‑controlled mortgage giants.

The announcement sparked a swift surge in the MBS market, but real estate technology company Redfin's head of economics research Chen Zhao forecasts a moderate move in mortgage rates in the long term.

"The ultimate impact will be small. The 30-year fixed mortgage rate commonly used by the average homebuyer may dip from about 6.15% to about 6%," Zhao wrote.

Mortgage News Daily reported that the 30-year fixed rate was 6.07% on Jan. 14.

"In today's case, the net effect was that the average lender was perfectly unchanged versus yesterday — not a bad outcome considering today is tied for the 3rd lowest rates of any day going back to early 2023," according to Mortgage News Daily Chief Operating Officer Matthew Graham.

Mild inflation report unlikely to move mortgage rates

"In December, the Consumer Price Index for All Urban Consumers rose 0.3 percent, seasonally adjusted, and rose 2.7 percent over the last 12 months, not seasonally adjusted," reported the Bureau of Labor Statistics (BLS) on Jan. 13.

Redfin suggests that's an inflation report that likely will not affect mortgage rates.

"Mortgage rates are unlikely to move after a mild inflation report still marred by government shutdown-related distortions," Redfin wrote. "Looking through the statistical issues, inflation likely remains as expected, keeping the Fed on hold for the foreseeable future."

More on mortgages, housing market:

• Zillow sounds alarm mortgage rates, housing market
• Berkshire Hathaway HomeServices predicts housing market pivot
• Redfin sends strong message on mortgage rates

Based on my 20 years of experience working in finance newsrooms, I have found that increases and decreases in mortgage rates are often viewed by experts as likely to follow increases and decreases in interest rates set by the Federal Reserve, although there is no direct correlation, strictly speaking.

"The Fed will remain on hold and mortgage rates are unlikely to budge much for the foreseeable future," predicted Redfin.

"The Fed is much more focused on labor market data and any signs of increasing recession risk that would warrant faster rate cuts," Redfin added. "Much of the attention right now in financial markets is on Fed independence given the news of a criminal investigation into Chairman Powell."

Redfin predicts Federal Reserve will not hike interest rates

• "Inflation was slightly lower than expected in December in today’s CPI report," Redfin wrote. "The numbers are still skewed by the government shutdown, but underlying inflation is unlikely to be a major cause for concern."
• Most of the inflation running above the preferred level of the Federal Reserve is concentrated in goods rather than services, according to Redfin.
• The main source of this goods‑related inflation is tariff policy, which has temporarily pushed prices higher.
• As these tariff‑driven price increases work their way through the system, the elevated inflation should ease in 2026.
• Once tariff effects fade, the underlying inflation trend appears stable, suggesting limited pressure for the Fed to raise interest rates.

Redfin not sure Fannie Mae, Freddie Mac could spend $200 billion

Redfin noted that Fannie Mae and Freddie Mac have already been increasing their MBS purchases through late 2025, citing a Bloomberg story.

"Whether they could make $200 billion in additional purchases depends on how much cash they have, and whether they have room in their portfolio before they hit the regulatory caps on how much MBS they can retain," Redfin wrote.

And Redfin said President Trump could not direct the Fed to make MBS purchases.

"The Fed is independent from the executive branch. On numerous occasions, Fed Chair Powell has rejected the idea of buying MBS to bring mortgage rates down," according to Redfin.

"He has pointed to the housing supply shortage as the root cause of the affordability crisis. The Fed also started to pivot away from MBS toward Treasuries in late 2025."

Related: Warren Buffett's Berkshire Hathaway predicts real estate shift