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Market Update - March 28, 2025

Friday, March 28, 2025

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.

Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. Polly data is calculated using actual locked rates. Rates are inclusive of locks that occur below par, at par and therefore consider discounts, points, and rebates. Rates are based on a scenario with a 780 Credit Score, <60% LTV, Purchase transaction. As of 03/27/2025 – @12:00 PM EST.
A chart titled 'A Quick Look Back,' summarizing key economic events from February 28 to March 6, 2025. The table includes Event Date, Event Name, Actual Data, Forecast, Previous Data, and Commentary. On February 28, the Core PCE Price Index for January increased 0.3% month-over-month, matching expectations and the same pace as in December 2024, indicating stable inflation. On March 3, the ISM Manufacturing PMI for February came in at 50.3, slightly below the forecast of 50.5 and down from January's 50.9, signaling continued but slower expansion in the manufacturing sector. On March 5, the ADP Jobs report showed private businesses added only 77,000 jobs in February, well below the forecasted 140,000 and marking the smallest gain in seven months. This follows an upwardly revised 186,000 jobs added in January. Also on March 5, the ISM Non-Manufacturing PMI for February rose to 53.5, surpassing both the forecast of 52.6 and January's 52.8. The increase reflects stronger growth in the services sector, with business activity, new orders, employment, and supplier deliveries all expanding for the third consecutive month—the first such streak since May 2022. On March 6, Initial Jobless Claims for the week ending March 1 dropped to 221,000, better than the forecasted 235,000 and down from 242,000 the previous week. This marks a return to historically low levels following a brief two-month high in earlier periods.

Market Commentary 

Interest rates remained flat for the week of March 21st to March 27th, 2025. This week, mortgage rates are mainly driven by the financial market's wariness over President Donald Trump's economic policies. The Federal Reserve's decision-making body voted on March 19 not to reduce or raise its benchmark interest rate in order to evaluate the impact of the administration's trade and austerity measures.

Experts agree we won't see mortgage rates in the 2% to 3% range in our lifetimes. However, rates around the 6% level are entirely feasible if the U.S. succeeds in controlling inflation and lenders feel confident about the economic outlook. In fact, rates dipped slightly at the end of February, falling closer to the 6.5% mark than had been observed for some time.

Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 03/27/2025 – 12:00 PM EST
Market Review: Optimal Blue's Production Metrics:
A chart titled: "Rate Lock Volume by Loan Purpose"
A chart titled "Mix of Business by Loan Product"

U.S. National Home Price Index NSA Housing months-of-supply:

A graphic titled "U.S. Home Price Insights - March 2025"  with information on national home price growth data from January 2025. Current month-over-month is 0.04% and current year-over-year is 3.3%. Forecast month-over-month is 0% and year-over-year is 3.6%. Affordability Meter: national median home price is $375,000 and income required to afford a median-priced home is $83,400.

Property Tax Revenue Breakdown:

A graphic titled "Top 10 Hottest Markets".
A graphic titled "Which areas are affordable?" Tracking the top 5 highest and lowest median sales prices. Markets to watch: markets with "very high" risk (>70% probability) of price decline.
A chart titled "Single Family Serious Delinquency Rates (90+ days or in foreclosure).

Money Moves              

Cross-border fund flows are going to meaningfully shift as President Trump tries to reduce or eliminate trade deficits. Because the trade deficit is offset by the capital account, a lower deficit means fewer dollars being poured back into stateside physical assets, equities, and debt. So, more production and jobs at home, but higher capital costs and a lower rate of return on investments. There is never a free lunch

- Elliot F. Eisenberg, Ph.D., Economist

News You Can Use

Interest rate and annual percentage rate (APR) are based on current market conditions as of 03/27/2025, 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 03/27/2025 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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