Hi everyone!

Hope you’re doing well! As we move through the early months of 2025, interest rates are in focus again. With mortgage rates showing slight improvements and economic indicators shifting, this is a key moment for both buyers and real estate professionals. Let’s break down what’s happening and what it means for you.

Where Are Mortgage Rates Headed?

Right now, mortgage rates are trending slightly lower, which is great news for those looking to buy or refinance. The market is being influenced by several factors, including economic outlook, inflation, and global financial trends.

Key Influences:

Inflation remains sticky – While we’ve seen a slowdown from the highs of 2022, inflation is still above target levels, meaning the Fed is cautious about making rate cuts too soon.
Deficit spending and government policies – More government spending means more borrowing, which can put upward pressure on rates in the long run.
Market expectations for Fed rate cuts – Earlier, we were anticipating several rate cuts in 2025, but now, it looks like the Fed is taking a more patient approach.

What Happened in the Market This Week?

This past week was a rollercoaster for bonds and interest rates. The Fed’s preferred inflation metric, the Core PCE, came in as expected, which initially pushed mortgage rates lower. However, later in the day, news broke about new tariffs on imports from Canada, Mexico, and China, causing markets to react and rates to slightly reverse course.

Even with this volatility, we’ve seen improvement in rates, which is promising for buyers who’ve been waiting for better affordability.

The Fed’s Stance: No Rush to Cut

Federal Reserve Chair Jerome Powell made it clear that the central bank is in no hurry to cut rates, reinforcing that the economy is still holding strong.

A key takeaway from their recent statement was: "The unemployment rate has stabilized, and labor market conditions remain solid." This means job growth remains steady, which is good for the housing market because buyers need stable employment to secure home loans.

Many people assume that when the Fed cuts rates, mortgage rates will immediately follow. However, history has shown that mortgage rates often move based on inflation expectations rather than direct Fed actions. In some cases, even after rate cuts, mortgage rates can stay elevated if inflation fears remain.

Why Lower Oil Prices Matter

A lesser-known factor in mortgage rate trends is oil prices. Recently, oil prices have dropped significantly, reaching their lowest levels of 2025. Why does this matter? Lower energy costs can help slow inflation, which in turn could help bring mortgage rates down further.

What This Means for Buyers & Agents

If you’re a homebuyer, now is the time to get serious about locking in a rate. Even though rates are still higher than they were a few years ago, recent improvements make home purchases more feasible than they were last fall. If you’re thinking about refinancing, it may also be worth discussing with a mortgage expert to see if waiting for further declines or acting now is the better choice for your financial situation.

For real estate agents, this is a great time to educate clients. Many buyers have been hesitant due to higher rates, but with stabilization and slight improvements, they may find more opportunities in today’s market. Encouraging clients to get pre-approved and stay engaged will help them be ready when the right home hits the market.

What’s Coming Next?

Next week, we’ll be keeping a close eye on job market data. Reports on job openings, private sector hiring, and the unemployment rate will provide a clearer picture of where the economy is headed. If we see signs of economic slowing, it could push the Fed to take a more aggressive stance on rate cuts, leading to further mortgage rate improvements.

Final Thoughts

This is a dynamic market, and every shift presents new opportunities. Whether you’re a buyer looking to take advantage of improving rates or an agent helping clients navigate the market, staying informed is key.

I’ll be watching the trends closely and will keep you updated on what’s next. Let’s connect if you have any questions or need guidance on your real estate goals!

All the best,

AJ Chamberlin
📞 +1 (303) 588-8999
📧 aj@attitudehomes.com
🌐 www.attitudehomes.com

Credits:
Mark Sööt | Mortgage Loan Officer
Elevations Credit Union
📞 (303) 817-0089
📧 Mark@elevationscu.com
🌐 Visit Mark’s Website
1301 Walnut St., Suite 100, Boulder, CO 80301
NMLS: 403853