This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
Interest rates remained flat for the week of February 7th to February 13th.
Surprisingly strong U.S. inflation in January stoked investor fears that a heating economy and looming tariffs could corner the Federal Reserve, undercutting interest rate-cut hopes and even raising the threat of a hike.
U.S. consumer prices increased more than expected in January, reinforcing expectations the central bank will be in no rush to resume cutting interest rates, particularly as economic uncertainty is exacerbated by the expected inflationary impact of U.S. President Donald Trump's tariffs on key U.S. trade partners.
Fed Chair Jerome Powell said in congressional testimony this week that the Fed was prepared to keep rates unchanged until inflation resumes its decline. But the hot inflation reading will likely complicate investors' efforts to game out when it may cut rates again, with some even starting to voice concerns that its next move may be a hike to contain price pressures, a shift that would rattle markets.
Fed Watch: Target rate (in bps) possibilities, according to the CMEGroup (as of 02/13/2025 – 2:00 PM EST):
Market Review: Optimal Blue’s Production Metrics:
2nd Look at Local Housing Markets in January:
10 housing markets seeing the biggest home price gains—and 10 seeing the biggest declines. The Freddie Mac House Price Index tracks 384 metro area housing markets. Here's the latest data.
Bad Budget
In the first four months ofFY25, the budget deficit totaled $838 billion; $306 billion more Y-o-Y. Revenues were $11 billion higher, outlays were $317 billion higher. But some of the increase was due to calendar effects. Absent them the deficit would have been $750 billion. Despite the large rise, the CBO still projects the CY25 deficit will be $1.9 trillion, unchanged from CY24, and in my opinion, inexcusably high- Elliot F. Eisenberg, Ph.D., Economist
News You Can Use:
· Inflation Accelerated in January
· Here’s what the privatization of Fannie Mae, Freddie Mac may mean for homebuyers and investors
· Hopes for more Fed rate cuts dim as Powell notes hot CPI means ‘we’re not quite there yet’
Interest rate and annual percentage rate (APR) are based on current market conditions as of 02/13/2025, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by HomeServices Lending, LLC. Not available in all states. Rate is as of 02/13/2025 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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