2025 Mortgage Market Update: A Rollercoaster Ride Ahead?

Happy New Year! I hope you had a wonderful holiday season. As we kick off 2025, I wanted to give you a quick update on the mortgage market and what we might expect in the coming months.

The January Effect

Interest rates ended 2024 around 7 percent – higher than many analysts anticipated for the year. This was largely due to persistent inflation and the Federal Reserve's cautious approach to rate cuts. The good news? Things can change quickly, just as they did last year.

January is historically a volatile month for interest rates. Looking back at the past few years, we've seen significant swings in the 10-year Note yield (which often influences mortgage rates) within the first few weeks of January. So, buckle up!

Several factors will influence rates this year, including inflation, government debt, economic growth, and the Fed's actions. Speaking of the Fed, they're expected to cut rates only twice this year. However, our new President and Congress could significantly impact rates with their fiscal policies, particularly how they address our national debt.

The latest survey data of average rates, published weekly by Freddie Mac, shows mortgage rates holding steady near 7 percent, with the average 30-year fixed-rate mortgage at 6.91 percent. While this is higher than last year, there are some positive signs. New home listings are up nearly 8 percent compared to December 2023, and pending home sales, while slightly down, indicate that buyers are still active.

Looking ahead, keep an eye on key economic reports like the December Jobs Report and the JOLTS report, which will give us insights into the labor market. Treasury auctions and Fed speakers can also trigger market movements.

As for the monthly Jobs Report that comes out this Friday, the consensus is we’ll see a gain of 157,000 new jobs and for the jobless rate to stay steady at 4.2 percent. Private payrolls are seen up 130,000. These numbers would be consistent with a general cooling trend in the employment market after a few months of readings skewed by weather and strikes.?

The bottom line? Predicting interest rates is like predicting the weather – it's an educated guess at best! But by staying informed and working with a trusted mortgage professional (like me!), you can navigate the market effectively.

Whether you're considering buying a new home, refinancing your current mortgage, or just want to stay updated on market trends, I'm here to help. Feel free to reach out anytime with questions or to schedule a call. Simply send me an email, or you can text/call me at 818.307.6072.

Best wishes for a prosperous 2025!