Stubborn price pressures and solid growth keeps rate relief distant for mortgage lenders
The latest US inflation and growth figures point to a central bank that is likely to stay put longer than mortgage markets have hoped.
Core personal consumption expenditures, the Fed’s preferred gauge, rose 0.3% in March and 3.2% year over year, the highest since late 2023.
Headline PCE climbed 0.7% on the month and 3.5% from a year earlier, while first‑quarter GDP expanded at a 2% annualized pace. That's below expectations but up from 0.5% in Q4 2025.
Initial jobless claims dropped to 189,000 in late April, the lowest reading since 1969.
The inflation data showed much of the pressure coming from goods, with prices up 1.4% in March, lifted by an 11.6% surge in energy costs tied to the Iran conflict. Services prices rose a more modest 0.3%.
The jump in energy appeared to weigh on real consumer spending, which grew just 1.6% in the quarter even as overall GDP was propped up by a 4.4% rise in government outlays and strong investment in AI‑related equipment and software.
The reports landed a day after the Federal Open Market Committee again left its policy rate unchanged, in a meeting marked by four dissents and language that some members felt leaned too far toward signaling future cuts.
The combination of re‑accelerating inflation and a still‑firm jobs backdrop is likely to harden resistance to near‑term easing.
Tune in to our third live blog of 2026 at Mortgage Professional America. Today, we are covering the Federal Reserve’s third rate announcement of the year.https://t.co/7w5MmWhCn7
— Mortgage Professional America Magazine (@MPAMagazineUS) April 29, 2026
Mortgage Bankers Association chief economist Mike Fratantoni said the first‑quarter data reinforces the case for patience from policymakers.
“This re-acceleration in inflation, driven by the jump in energy prices, will be enough to keep the Fed on hold for the foreseeable future,” Fratantoni said.
Fratantoni and the MBA previously projected that, even with eventual Fed cuts, 30‑year mortgage rates are likely to hold in roughly the 6% to 6.5% range through 2026, with any declines creating only brief windows for refinances.
The association still expects single‑family originations to edge higher over the next two years, helped by gradual rate relief and a buyer‑friendlier market.
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