Author: Eric BernsteinPublished:
The big Fed meeting last week left little changed when it comes to rates, but that's not stopping homebuyers from coming off the sidelines.
The average rate on a 30-year fixed rate conventional loan dipped a bit to 6.56% - down from 6.61%!
We've seen a big resurgence in buyers wanting 7-year adjustable rate mortgages instead of 30 year fixed rate mortgages. The rate is about 0.25-5% lower than a 30-year fixed (depending on the borrower) and borrowers want the savings (especially at these home prices) given the expectations for interest rates to drop within the next 7 years.
Sign up for our weekly Friday rate texts to stay in the know on where rates are week by week! It's a must for anyone planning to buy or refinance in 2025!
The Fed Sees Muddy Waters Ahead
The Federal Reserve is expected to predict the future, at least when it comes to the labor market and inflation. While it's an impossible task (as we've seen from 2021-2025), it's being made even more challenging with tariff wars - at least that's what Powell said at the press conference following the Fed meeting last week.
Remember, the Federal Reserve has a DUAL mandate - jobs and inflation. While tariffs a âgood partâ of the higher inflation forecast the central bank made Wednesday has to do with tariffs. The Fed also sees slower growth and therefore more risk to the labor market in 2025. The Fed is holding to their current strategy of 2 cuts this year but won't say when those might take place.
âWe think our policy is a good place to react to what comes,â Powell said. âWe think the right thing to do is to wait here for greater clarity about what the economy is doing.â
Rate cuts DON'T necessarily equal lower mortgage rates. The lowest we've seen mortgage rates in years was the day before the Federal Reserve made the first cut in 2024. Future expectations of the Fed's actions and their economic outlook is more important. Despite there being no cut, rates fell on Wednesday because the Fed acknowledged that 2025 will be a year for slower economic growth and reduced their forecast from 2.1% down to 1.7%.
Existing Home Sales Surprise
Home sales rose 4.2% last month to a seasonally adjusted annual rate of 4.26M units, the National Association of Realtors said on Thursday, which way more than the 3.95M units expected. Overall it's another good sign for the housing market as buyers continue to defy expectations and buy more homes.
The reason - more inventory and more buyer negotiating power. "Home buyers are slowly entering the market, said Lawrence Yun, the NAR's chief economist. "Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand." Nationwide inventory is getting higher but it's also only sitting at 3.5 months of supply. Economists like to see this number closer to 6 months.
Of course, this is always market dependent.
Areas like Austin have historically high levels of inventory (5.7 months worth of supply) giving buyers wide flexibility on which house they want to buy and more importantly, being able to extract seller credits to use towards closing costs and rate buy downs, making home buying way more affordable.
On the other hand, areas of the northeast (especially New Jersey and Connecticut) are at historic lows. Connecticut has 70% less inventory than it did before the pandemic! Meaning these still houses are still going for above ask and in some instances buyers are waiving contingencies like appraisals and inspections.
The bottom line is know your market! Work with a realtor who can get you the best deal regardless of where you're situated.
Rate Cut Predictions
June 18th is still the near certain date for the first rate cut... no new news after last week's meeting
The average rate on a 30-year fixed rate conventional loan dipped a bit to 6.56% - down from 6.61%!
We've seen a big resurgence in buyers wanting 7-year adjustable rate mortgages instead of 30 year fixed rate mortgages. The rate is about 0.25-5% lower than a 30-year fixed (depending on the borrower) and borrowers want the savings (especially at these home prices) given the expectations for interest rates to drop within the next 7 years.
Sign up for our weekly Friday rate texts to stay in the know on where rates are week by week! It's a must for anyone planning to buy or refinance in 2025!
The Fed Sees Muddy Waters Ahead
The Federal Reserve is expected to predict the future, at least when it comes to the labor market and inflation. While it's an impossible task (as we've seen from 2021-2025), it's being made even more challenging with tariff wars - at least that's what Powell said at the press conference following the Fed meeting last week.
Remember, the Federal Reserve has a DUAL mandate - jobs and inflation. While tariffs a âgood partâ of the higher inflation forecast the central bank made Wednesday has to do with tariffs. The Fed also sees slower growth and therefore more risk to the labor market in 2025. The Fed is holding to their current strategy of 2 cuts this year but won't say when those might take place.
âWe think our policy is a good place to react to what comes,â Powell said. âWe think the right thing to do is to wait here for greater clarity about what the economy is doing.â
Rate cuts DON'T necessarily equal lower mortgage rates. The lowest we've seen mortgage rates in years was the day before the Federal Reserve made the first cut in 2024. Future expectations of the Fed's actions and their economic outlook is more important. Despite there being no cut, rates fell on Wednesday because the Fed acknowledged that 2025 will be a year for slower economic growth and reduced their forecast from 2.1% down to 1.7%.
Existing Home Sales Surprise
Home sales rose 4.2% last month to a seasonally adjusted annual rate of 4.26M units, the National Association of Realtors said on Thursday, which way more than the 3.95M units expected. Overall it's another good sign for the housing market as buyers continue to defy expectations and buy more homes.
The reason - more inventory and more buyer negotiating power. "Home buyers are slowly entering the market, said Lawrence Yun, the NAR's chief economist. "Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand." Nationwide inventory is getting higher but it's also only sitting at 3.5 months of supply. Economists like to see this number closer to 6 months.
Of course, this is always market dependent.
Areas like Austin have historically high levels of inventory (5.7 months worth of supply) giving buyers wide flexibility on which house they want to buy and more importantly, being able to extract seller credits to use towards closing costs and rate buy downs, making home buying way more affordable.
On the other hand, areas of the northeast (especially New Jersey and Connecticut) are at historic lows. Connecticut has 70% less inventory than it did before the pandemic! Meaning these still houses are still going for above ask and in some instances buyers are waiving contingencies like appraisals and inspections.
The bottom line is know your market! Work with a realtor who can get you the best deal regardless of where you're situated.
Rate Cut Predictions
June 18th is still the near certain date for the first rate cut... no new news after last week's meeting
Key reporting dates this week:
Mon, 3/24: S&P flash U.S. services PMI
Tues, 3/25: S&P Case-Shiller home price index (20 cities), Consumer confidence, New home sales
Wed, 3/26: Durable-goods orders
Thurs, 3/27: Initial jobless claims, GDP (second revision), Pending home sales, Advanced U.S. trade balance in goods
Fri, 3/28: PCE index, Core PCE index, Consumer sentiment (final)
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About the Author:
Eric Bernstein is the President and Co-Founder of LendFriend Mortgage, where he helps homebuyers make smarter, more confident decisions in todayâs fast-moving housing market. With over a decade of experience guiding hundreds of clientsâfrom first-time buyers to seasoned investorsâEric brings a mix of market insight, strategy, and personalized service to every mortgage transaction. Each week, Eric breaks down the housing and economic headlines that matter, giving readers a clear, no-fluff view of whatâs happening and how it might impact their buying power.