On Wednesday, the Federal Reserve announced a 0.25 per cent increase in its short-term interest rate, its latest move to combat high inflation. Mortgage rates, which are independent of the Fed's rate, have been climbing since the Fed began raising its own rates about a year ago. This has hit the previously hot housing market, creating a sort of standoff between buyers and sellers.

However, the Fed's latest rate hike may not lead to an increase in mortgage rates. Instead, mortgage rates are likely to stabilise and even fall in the coming weeks. According to Mortgage News Daily, the average rate for a 30-year fixed-rate loan was 6.49% on Wednesday afternoon. This was down slightly from 6.58% the day before.

Many believe this could be the last rate increase by the Federal Reserve for some time. The Fed's goal is to hit the economy and bring inflation down without pushing the country into a full-blown recession. Inflation has now come down from last year's highs, unemployment appears to be rising and higher interest rates have caused a banking crisis, with First Republic Bank being the latest victim.

"Mortgage rates are sensitive to the prospect of inflation," said Holden Lewis, a housing and mortgage expert at NerdWallet, in a statement." When investors believe inflation will fall in the next few years, mortgage rates will also fall. This rate hike by the Fed should help lower inflation, which will lower mortgage rates."

Lower mortgage rates will be a boon to homebuyers who would not be able to buy a property at today's high prices if they were to borrow at higher mortgage rates. It could also lead to more homes being listed for sale, easing the housing shortage.

Many sellers have been reluctant to give up record low mortgage rates to buy their next property, and if they were to take out a loan, they would need a higher mortgage rate. Lower interest rates may entice them off the sidelines.

"The housing market will see sales at a relatively low level, with more activity when rates fall and less when rates rise," said Danielle Hale, chief economist at Realtor.com®." Buyers and sellers are both very sensitive to interest rates right now."

Buyers shouldn't get their hopes up that rates will fall back to the pandemic levels of 19 years ago, when rates on 30-year fixed-rate loans fell to below 3 per cent. But they could stabilise below 6 per cent in the next year or so, says Robert Dietz, chief economist at the National Association of Home Builders.

"We're past the peak of interest rates," Dietz said. He does not expect rates to exceed 7 per cent again, as they will for 30-year fixed-rate loans at the end of 2022.

Pressure from regional banks could act as the equivalent of higher rates. Looking ahead, lenders are expected to be more cautious in extending loans to businesses, which could slow the economy down. This is the Fed's goal in raising interest rates.

However, there is no guarantee that the Fed will stop raising interest rates. If inflation does not continue to cool, or if unemployment falls below what the Fed would like to see, it may raise interest rates again. Mortgage rates may also increase accordingly.

However, if the country enters a recession and unemployment is higher than expected, the Fed may lower interest rates to stimulate the economy. This could lead to lower mortgage rates.

"We're teetering on the edge of a tipping point," Hale said." It's hard to predict too far into the future. Any new information will change the calculus."