Mortgage News February 2025
Mortgage Rates Trending Lower: What It Means for Homebuyers in 2025
Since peaking at around 7.25% in mid-January, the average 30-year mortgage rate has been on a downward trend. This shift isn’t necessarily due to favorable inflation or employment data—in fact, those indicators haven’t been particularly supportive of the bond market. Instead, other factors are influencing the rates:
Risk-Off Trade: The impressive performance of DeepSeek’s AI technology triggered a ‘risk-off’ sentiment, prompting investors to move money from stocks into the relative safety of bonds.
Tariff Negotiation Tactics: Growing beliefs that former President Trump’s tariff threats are more about negotiation tactics (with countries like Colombia) rather than firm policy targets have also played a role in calming market jitters.
As we look ahead, all eyes are on the latest Personal Consumption Expenditures (PCE) report. A surprise here could disrupt the current trend. After all, the last thing potential homebuyers need is a third consecutive year of rising mortgage rates just as the spring selling season kicks off.
What’s Next? Fed Funds Rate Predictions
Here’s a snapshot of what the Fed Funds Rate futures market is projecting for the coming months. Currently, the Fed Funds Rate policy range sits at 4.25–4.50%.
March 19 FOMC Meeting: There’s an 82% probability that the policy rate will remain at 4.25–4.50%, suggesting the Fed will hold steady. There’s an 18% chance of a 25 basis point (bps) cut, which would lower the rate to 4.00–4.25%.
May 7 FOMC Meeting: The probability of maintaining the current rate drops to 57%, while the chance of a 25 bps cut rises to 38%.
June 18 FOMC Meeting: It’s not until this meeting that the odds of rates being lower than they are today exceed 50%.
Expert Insights on the Housing Market
Lawrence Yun, NAR’s Chief Economist: “Home sales in the final months of the year showed solid recovery despite elevated mortgage rates. Typically, winter months see softer sales compared to spring and summer, but momentum is building with year-over-year sales climbing for three consecutive months. Consumers clearly understand the long-term benefits of homeownership. Job and wage gains, along with increased inventory, are positively impacting the market.”
Brian D. Luke, S&P DJI’s Head of Real Estate & Digital Assets: “National home prices are trending below historical averages, though markets in New York, Washington, D.C., and Chicago are well above norms, with New York leading the way. The Northeast was the fastest-growing region, averaging a 6.1% annual gain. However, markets out west and in once red-hot Florida are seeing growth below average. Tampa, for example, experienced its first annual decline in over a year. Despite below-trend growth, our National Index hit its 18th consecutive all-time high on a seasonally adjusted basis.”
Apartment List Rent Report: “Year-over-year rental rate growth has been negative since June 2023, but recent months indicate a potential return to positive growth this year. With the peak of the supply wave behind us, the era of declining rents may be nearing its end.”
What This Means for You
For homebuyers, the current environment presents a unique window of opportunity. With mortgage rates trending lower and potential rate cuts on the horizon, now might be the perfect time to explore your homeownership options. At Texas Lending Partners, we’re here to guide you through every step of the process, ensuring you make strategic mortgage decisions that align with your financial goals.
Whether you’re a first-time homebuyer, looking to refinance, or planning your next investment, our team of experienced loan officers is ready to help you navigate the ever-changing market. Contact us today to get started on your journey to homeownership.
SOURCE: Scott Bradley Brixen | List Reports
