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# Getting a Better Rate While the Fed Waits and Watches

May 16, 2026  

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In 2025, many prospective homebuyers were holding off on purchasing a home while waiting for lower rates in 2026. They hoped borrowing would become more affordable. However, the Federal Reserve did not lower the interest rate at the beginning of the year. The Fed has taken a “wait-and-see” approach toward interest rate cuts. Mortgage rates remain elevated and higher than many buyers expected due to inflation concerns and global uncertainty.

But today's market conditions do not mean you need to postpone your dream of homeownership in the U.S.

Smart borrowers are still finding competitive mortgage rates, especially with the help of mortgage companies that offer the best financing solutions.

## Mortgage Rates Haven’t Dropped Yet, and Here’s Why

The Fed does not directly set mortgage rates, but its policies strongly influence borrowing costs. In 2026, the Fed kept benchmark interest rates steady rather than even slightly lowering them.

Among the main reasons are persistent inflation concerns, volatile energy markets, and geopolitical events. All of these factors have contributed to the Fed’s cautious approach.

You can see that [Federal Reserve](<https://fred.stlouisfed.org/series/MORTGAGE30US>) economic data shows that mortgage rates now remain significantly higher than the historic rate lows seen in 2020-2021.

Homebuyers should be aware that even small changes in inflation and broader economic conditions can affect long-term bond yields – one of the main factors mortgage lenders consider when pricing loans. It means mortgage rates may stay elevated longer than prospective homebuyers expected.

Despite current market conditions, buyers who improve their credit score, reduce debt, avoid large purchases, and compare lenders can still secure a *better mortgage rate.*

## Your Credit Score Matters (Even More Than Ever)

When the market remains unstable, as in 2026, lenders become very selective. Your credit score can significantly impact your monthly payment and long-term borrowing costs.

Homebuyers with strong credit scores often receive significantly lower mortgage rates than those with average credit profiles.

Here are several mortgage tips before applying for a home loan:

- Pay all your bills on time
- Avoid applying for new credit cards or loans
- Lower credit card balances
- Avoid large purchases before your mortgage closing
- Check your credit report for errors

## Comparing Lenders Can Save You Thousands

Sometimes homebuyers accept the first mortgage quote they get without comparing alternatives. However, even for the same borrower, two lenders may offer very different closing costs, loan program options, interest rates, and more.

Even the [Consumer Financial Protection Bureau](<https://www.consumerfinance.gov/owning-a-home/explore-rates/>) recommends that buyers compare multiple lenders before choosing a mortgage. It is especially important in today's market, as lenders compete and offer favorable terms to borrowers with high creditworthiness.

## How Bigger Down Payments Make a Huge Difference

Higher down payments still help homebuyers secure better mortgage rates. Lenders will view the loan as less risky, so you can receive:

- More competitive interest rates
- Lower [monthly payments](<https://lbcmortgage.com/blog/falling-home-prices/>)
- Better approval odds
- Reduced mortgage insurance costs

Many homebuyers, especially [first-time buyers](<https://lbcmortgage.com/blog/mortgage-options-first-time-buyers/>), still purchase homes with smaller down payments. However, when you increase your upfront contribution, even slightly, you can get better financing terms.

## No Need to Wait for “Perfect Rates”

We often see homebuyers delay their purchases while waiting for mortgage rates to fall dramatically. However, timing the market perfectly is almost impossible. In addition, if mortgage rates eventually decrease, home prices and buyer competition may rise again.

Lower rates often increase demand quickly, but this leads to more bidding wars, higher home prices, and more intense market competition.

Today’s market may offer buyers:

- Less competition
- More negotiating power
- Seller concessions
- Flexible terms

Smart borrowers who buy a home now and refinance later may benefit more than those who wait indefinitely for lower rates.

## Refinancing Opportunities May Return Later

Many buyers also forget that mortgage rates can change in the future. Even if today’s rate is not perfect to get a loan, homeowners may still have opportunities to refinance later if mortgage rates decline.

That means buyers do not necessarily need to secure the ideal long-term rate today before purchasing a home. The main thing is ensuring the current payment fits comfortably within your budget.

## Secure a Better Rate with LBC Mortgage Help

We at LBC Mortgage understand how confusing today’s mortgage market can feel and help clients navigate changing interest rates, compare loan options, and find the most suitable financing solutions.

Clients choose us when they:

- Purchase their first home
- Buy a bigger property
- Invest in real estate
- Refinance an existing mortgage
- Explore non-traditional income loan options

Our team helps borrowers secure competitive financing, offering clear guidance throughout the process.

Turn to our mortgage specialists if you need to:

- Compare multiple loan programs
- Improve your approval chances
- Understand closing costs
- Explore rate buydown options
- Find the best loan options that fit your financial situation

With the right mortgage partner, such as LBC Mortgage, prospective homebuyers can move forward with greater confidence in any market environment.

Make your next move 

### What could your mortgage look like?

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**Author:** [Alex Shekhtman CEO & Founder, LBC Mortgage](<https://lbcmortgage.com/team/alex-shekhtman/>)

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## Frequently Asked Questions

- ### 1. Will mortgage rates go down in 2026?
**

We can’t predict these changes with certainty. Mortgage rates in the USA depend on inflation, Federal Reserve policy, and other broader economic conditions. Many financial experts expected lower mortgage rates in 2026, giving homebuyers hope. However, the Federal Reserve has continued to take a cautious approach without cutting interest rates.

Yes, the current housing situation remains uncertain, but at LBC Mortgage, we know that it’s possible to find competitive mortgage rates even in today’s conditions.

Our clients don’t need to postpone their homeownership goals indefinitely. We recommend several ways to improve your chances of securing favorable mortgage rates. You can improve your credit profile, pay all your bills, lower credit card balances, compare lenders to find the best offerings, and explore different loan programs. Those who choose not to wait for market changes may benefit from lower competition in today’s housing market.

Some homebuyers decide to purchase a new home now and refinance later if mortgage rates decline in the future. At our company, we’ll help you find a mortgage payment that comfortably fits your budget and long-term financial plans.
- ### 2. Does the Fed directly control/influence mortgage rates?
**

The Fed influences borrowing costs indirectly through its monetary policy. The Federal Reserve System in the USA controls the federal funds rate, whiсh affects how expensive it is for banks to borrow money. Changes in the federal funds rate can eventually influence mortgage lenders and broader financial markets.

Mortgage rates are also linked to investor expectations and the bond market. For instance, the Fed may not do anything to raise/lower the short-term interest rates it controls (also known as the Fed Funds Rate). Still, investor sentiment will dictate how the bond market reacts to rising inflation or economic uncertainty.

This example shows that mortgage rates can still fluctuate even though the Federal Reserve has kept its benchmark interest rate unchanged. Mortgage lenders monitor the financial markets daily when determining loan pricing and assessing borrower risk based on both credit rating and loan-to-value ratio.

Mortgage rates can be very sensitive to both economic data releases and future expectations within the different financial markets.

When evaluating mortgage rates, borrowers need to understand that they are influenced by multiple market factors, not just a single Fed decision.
- ### 3. What credit rating do you need to receive the best mortgage rate?
**

In the USA, borrowers with credit scores of 740+ (excellent) receive the most competitive mortgage rates. Homebuyers with a strong credit history can get lower rates, lower payments, and better loan options. However, credit scores are not the only criterion mortgage lenders use to determine whether or not to approve a loan application.

Mortgage lenders will also consider factors such as the debt-to-income ratio, job stability, income reliability, savings history, the size of the down payment, and the borrower’s overall financial responsibility. For example, a homebuyer may have a good credit score and also qualify for better loan programs if they have a steady income and little or no existing debt.

Many of the mortgage programs lenders offer are designed for borrowers with varying financial needs, including first-time homebuyers and those with non-perfect credit scores. It means that having a lower score does not automatically disqualify you from getting a mortgage.

Homebuyers seeking to improve their chances of securing a lower mortgage rate should focus on paying bills on time, reducing credit card balances, avoiding opening additional credit accounts, and reviewing their credit history for errors before applying for credit.

At LBC Mortgage, we assist borrowers in identifying the loan program that best fits their financial goals and help them navigate the mortgage process to obtain a loan.

Your home. Your goals. Your next step. 

## Let's find a loan that fits *your life.*

Buying or refinancing? Start with your goals. We'll help you explore the possibilities.

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