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

Mortgage rates are always in flux, but homebuyers have to wait more turbulence than usual Over the next few months.

As he begins his second term, President Donald Trump is moving forward on some of his own policies around immigration and tradewhich many experts see as inflationary.

“Higher tariffs and restrictive immigration policies would increase costs for homebuyers at a time when affordability is close to a four-decade low,” he said. Matt WalshThe Housing Economist at Moody’s Analytics.

Average 30-year fixed mortgage rates have stayed around a steep 7% for several weeks. While Trump has repeatedly claimed he would lower mortgage rates to 3% (which would mean a Severe economic crisis), the president does not set interest rates on home loans.

Even the Federal Reserve, which sets a short-term benchmark interest rate for lenders only indirectly affects the mortgage market. Between September and December, the central bank cut interest rates three times, but mortgage Prices did not fall.

That’s because rates are primarily driven by movements in the bond market, specifically the 10-year Treasury yield. Bond yields and interest rates rise and fall depending on how New economic data and policy changes shift market speculation and risk assessment.

right now, mortgage rates remain elevated due to a combination of factors: “strong” economic growth; potentially inflationary policies under the new Trump administration; and the Fed’s less aggressive rate-cutting path in 2025. at his first political meeting of the year onwards January 28-29The central bank is expected to keep interest rates steady.

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

“On mortgage rates, we’re more data-dependent than ever before,” he said Greg Sherbecomes direct and NFM LEDING.

Will the Fed meeting change the outlook for mortgage rates?

With slow progress on inflation and concerns about it subsiding, the Fed is expected to leave interest rates unchanged at its next few policy meetings.

“The earliest possible rate cut would be in March, and that suggests a convincing fall in (inflation) in both reports between now and then,” he said. Matt Graham of mortgage news every day. At the moment, however, most Investors are betting Another rate cut won’t come until late spring or early summer.

The Fed is likely to face pressure from the new president if no further cuts are made. During a virtual appearance at the World Economic Forum in Davos on Thursday, Trump said he would Demand interest rates drop immediately.

“I think I know the interest rates a lot better than they do. I think I know it’s certainly a lot better than whoever is primarily responsible for making that decision,” Trump said, likely referring to the chairman of the Fed Jerome Powell, to reporters in the Oval Office on Thursday. “If I disagree, I’ll let it be known.”

But there is There’s only so much Trump can really do in relation to the central bank. Apart from expressing his opinions, the President’s most direct authority over the Central Bank is through naming appointees to fill vacancies on the Board of Governors.

Like Supreme Court appointments, the president could appoint Fed board members whose views on monetary policy aligned with his own. However, the earliest Trump will be able to make any new appointments will be early 2026.

Will mortgage rates drop 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 after Trump’s re-election and the Fed’s announcement of less frequent policy easing in 2025, the outlook for mortgage rates has shifted upward.

Fannie Mae now expects average 30-year fixed mortgage rates To hold above 6.5% until early 2025. Meanwhile, Moody’s Walsh forecasts mortgage rates to average just below 7% throughout the year.

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

At CNET’s 2025 Mortgage ForecastMohtashami noted that 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 fuel inflation or increase the government’s debt deficit.

A look at the housing market 2025

Today’s Market for unaffordable housing results from high mortgage rates, a A long-standing housing shortageexpensive housing prices and loss of purchasing power due to inflation.

🏠 Low Housing Inventory: 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 shortfall of about 3.7 million homes.

🏠 Increased mortgage Prices: At the beginning of 2022 mortgage rates hit 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 are still high, pricing millions of prospective buyers out of the housing market.

🏠 Effect of fees: Because the majority of homeowners are Locked in mortgage rates The under 5% are reluctant to give up their low mortgage rates and have little incentive to list their homes for sale, leaving a shortage of resale inventory.

🏠 High housing prices: Although housing demand has been limited in recent years, home prices remain high due to a lack of inventory. The median home price in the US was $427,179 In December, it was up 6.2% year over year, according to Redfin.

🏠 Steep inflation: Inflation means an increase in the cost of basic goods and services, reducing purchasing power. It also affects mortgage rates: when inflation is high, lenders typically raise consumer loan rates to ensure a profit.

What home buyers need to know

It’s never a good idea to rush Buying a home Not knowing what you can afford, so establish a clear home buying budget. Here’s what experts recommend before you buy a home:

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

💰 Save for a bigger down payment. Bigger advance payment It allows you to take out 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 eliminate private mortgage insurance.

💰 Shop mortgage lenders. Comparing loan offers from multiple mortgage lenders can help Negotiate a better rate. Experts recommend getting at least two to three loan appraisals from different lenders.

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

💰 Consider mortgage points. You can get a lower mortgage by buying mortgage pointswith each point worth 1% of the total loan amount. One mortgage point equals a 0.25% reduction in your mortgage rate.

More on today’s housing market