Mortgage forecasts for the week of January 27 to February 2, 2025

Mortgage rates are always in flux, but homebuyers should expect that More disturbance than usual Over the next few months.

Since beginning his second term, President Donald Trump has been moving forward with some of his term Migration and trade policiesThis is what many experts see as inflationary.

“High tariffs and restrictive immigration policies will raise costs for homebuyers at a time when affordability is near its lowest levels in four decades,” he said. Matt WalshHousing Economist at Moody’s Analytics.

Average 30-year fixed mortgage rates It remained at a sharp level of 7%. For several weeks. While Trump has repeatedly claimed that he will lower mortgage interest rates to 3% (which he suggests is likely to happen). Severe economic crisis), the president does not set interest rates on home loans.

Even the Federal Reserve, which sets the benchmark short-term interest rate for lenders, only… It indirectly affects the mortgage market. Between September and December, the central bank cut interest rates three times, excluding mortgages Prices did not go down.

This is because prices are primarily driven by movement in the bond market, specifically the 10-year Treasury yield. Bond yields and interest rates rise and fall depending on how you do New economic data Policy changes transform market speculation and risk assessment.

now, Mortgage rates They remain high due to a combination of factors: “strong” economic growth; Potential inflationary policies under the new Trump administration; And the Fed’s less aggressive path to cutting interest rates in 2025. In the first policy meeting of the year in January 28-29The central bank is expected to keep interest rates steady.

Mortgage rates will continue to fluctuate as investors speculate on what’s next. If inflation remains high or begins to rebound, mortgage interest rates will rise, regardless of the president’s promise to lower borrowing costs.

“In terms of mortgage rates, we are more data-driven than ever before,” he said. Greg SherrManaging Director at NFM Lending.

Will the Fed meeting change expectations for mortgage interest rates?

Given the slow progress in inflation and concerns about its reheating, the Fed is expected to leave interest rates unchanged in the next few policy meetings.

He said, “The earliest possible interest rate cut will be in March, assuming a convincing decline in (inflation) in the two reports between now and then.” Matt Graham Daily Mortgage News. So far, though, most Investors are betting The price won’t be reduced again until late spring or early summer.

The Fed is likely to face pressure from the new president if additional cuts are not made. During a virtual appearance at the Davos World Economic Forum on Thursday, Trump said he would do so Demanding a reduction in interest rates Immediately.

“I think I know interest rates a lot better than they do, and I think I certainly know a lot better than the person who is primarily responsible for making that decision,” Trump, likely referring to Federal Reserve Chairman Jerome Powell, told reporters at the White House. Most likely to Fed Chairman Jerome Powell. The Oval Office on Thursday. “If I don’t agree with that, I will announce it.”

But there is Trump can’t really do much With regard to the central bank. Aside from expressing his views, the president’s direct authority over the central bank is through the nomination of appointees to fill vacant positions on the Board of Governors.

Similar to stacking the Supreme Court, the president can appoint members to the Fed’s board whose views on monetary policy align with his own. However, the soonest Trump will be able to make any new appointments will be early 2026.

Will mortgage rates fall in time for the spring home buying season?

Earlier last year, many economists optimistically predicted that interest rates would fall below 6% in early 2025. But since Trump’s re-election and the Fed’s announcement of less frequent policy easing in 2025, mortgage rate expectations have shifted Real estate to the top.

Fannie Mae Now you expect average 30-year fixed mortgage rates to stabilize above 6.5% until early 2025. Meanwhile, Moody’s and Walsh expect mortgage rates to average just under 7% over the course of the year.

However, next month’s economic data could always change the equation. “If economic data starts to weaken, we may have already seen peak rates for the year,” he said. Logan is shysenior analyst at HousingWire.

At CNET Mortgage forecasts 2025Mohtashemi noted that interest rates in the low 6% range are still possible in 2025. But that will be difficult to achieve, especially in time for the spring home-buying season, if new economic policies recharge inflation or increase the government debt deficit. .

A look at the 2025 housing market

today Unsustainable housing market Consequences of higher mortgage rates, a Long-standing housing shortagesRising house prices and loss of purchasing power due to inflation.

🏠 Low housing stock: A balanced housing market typically has five to six months of supply. Most markets today average about half that amount. according to Freddie MacWe still have a shortage of about 3.7 million homes.

🏠 High mortgage Rates: In early 2022, mortgage rates reached historic lows of around 3%. As inflation rose and the Fed raised interest rates to tame it, mortgage rates more than doubled. In 2025, mortgage rates will remain high, taking millions of potential buyers out of the housing market.

🏠 Rate lock effect: Since the majority of homeowners are Locked in mortgage rates Below 5%, they are reluctant to give up low mortgage rates and have little incentive to list their homes for sale, leaving a scarcity of resale inventory.

🏠 House prices rise: Although demand for home purchases has been limited in recent years, home prices remain high due to a lack of inventory. The average price of homes in the United States was $427,179 in December, up 6.2% year over year, according to Redfin.

🏠 Severe inflation: Inflation means an increase in the cost of basic goods and services, which leads to a decrease in purchasing power. It also affects mortgage rates: when inflation is high, lenders usually raise interest rates on consumer loans to ensure a profit.

What home buyers should know

It’s never a good idea to rush into this Buying a house Without knowing what you can afford, so set a clear budget for purchasing a home. Here’s what experts recommend before buying a home:

💰 Build your credit score. Your credit score will help determine whether you qualify for a mortgage and at what interest rate. A Credit score A score of 740 or higher will help you qualify for a lower rate.

💰 Save for a larger down payment. greater Initial payment It allows you to get a smaller mortgage and get a lower interest rate from your lender. If you can afford it, a down payment of at least 20% will also void your private mortgage insurance.

💰 Shop for mortgage lenders. Comparing loan offers from multiple mortgage lenders can help you Negotiate a better price. Experts recommend getting at least two or three loan estimates from different lenders.

💰 Consider renting. choose for Rent or buy a house It’s not just comparing your monthly rent to your mortgage payment. Renting offers flexibility and lower upfront costs, but buying allows you to build wealth and have more control over your housing costs.

💰 Consider mortgage points. You can get a lower mortgage rate by buying Mortgage pointsThe cost of each point is 1% of the total loan amount. One mortgage point equals a 0.25% decrease in your mortgage rate.

More on today’s housing market