HERE’S LOOKING AT 2025

It’s already April, and we’re wondering how the year will shake out for our industry. At least the new tariffs don’t bring us to our knees like the Federal Reserve Bank has already done. But what’s to be expected demand-wise? Well, let’s take a look at our crystal ball:

• 30-YEAR MORTGAGE RATE FORECAST: While currently hovering between 6.5-7%, the consensus seems to be little change throughout the year, with the rates dropping to no less than 5.75-6% by year-end (Fannie Mae, MBA). J.P.  Morgan sees them easing to only 6.7% by year-end.
• NEW TARIFFS: There is no doubt that the investment community is all-consumed with the newly imposed tariffs and if they will mean a rise in interest rates. 
• MORTGAGE RATE MIRRORS 10-YEAR TREASURY BILL: Google this and add a point and a half or two, and you will easily come up with a good idea of where the mortgage rate will be that week because mortgages are packaged and resold as bonds.
• FED POLICY ALONE DOES NOT DETERMINE MORTGAGE RATE: While the Fed sets the borrowing rate, mortgages are sold by the mortgagor and packaged into a bond for resale on the open market to investors. Consequently, these bonds trade at the prevailing rate determined by economic conditions.
• HOME SALES ARE STILL HISTORICAL LOW BUT PICKING UP: People are realizing that the US is not going back to 2.5%-4% mortgage rates. However, about 55% of all mortgages in the US still have a rate under 4%, according to Realtor.com.
• JANUARY HOME SALES THE LOWEST SINCE 2001: According to the National Association of Realtors, however, they are picking up since January.
• MORTGAGE REFINANCE LEVELS: Application levels have ticked up this year, but activity is still around the lowest levels of this century, according to WSJ.
• CONSUMERS ARE STRETCHED: This is making it harder for many to get loans. In February, almost 42% of applicants reported being rejected for mortgage financing. That compares to only 27% a year ago in February and 16% two years ago.

We have no precise forecast, but grinding the numbers, it looks like there is a ray of hope in a still difficult economic environment. However, people are always moving. The numbers are just much smaller. Your strategy for getting sales must reflect this.

Onward & Upward!

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