I hope your holiday-shortened week is off to a wonderful start! As we settle into the second half of January, there’s lots going on in the news that has the potential to affect markets and mortgage rates. Let’s break it all down.
The “Green Shoots” of Growth
We have some truly encouraging news to kick off the year. Mortgage rates recently hit three-year lows, with the 30-year fixed-rate average dipping by .10 percent just this week. Average rates, according to Freddie Mac’s survey, are a full percentage point lower than this same time last year!
This shift has sparked a significant surge in activity; mortgage applications jumped nearly 30 percent recently, and pending home sales are at their highest level in three years. Whether you are looking to buy your first home or considering a refinance, these are the leading indicators we’ve been waiting for. It’s a clear signal that the “sideline” is getting a lot less crowded.
What’s Driving the Shift?
A big part of this stability comes from cooling inflation. Core CPI is sitting at 2.6 percent, which is music to the ears of the Federal Reserve. Even better, the administration has stepped in with a plan for Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities. This is a strategic move designed to keep mortgage rates lower and more stable for people like you.
However, it’s not all just numbers on a spreadsheet. We are seeing some fascinating long-term trends:
• The “Great Wealth Transfer”: A historic $2.4 trillion in real estate inheritance is expected to pass down to Gen X and Millennials over the next decade. For many families I work with, real estate is moving from just “a place to live” to a core pillar of long-term wealth strategy.
• New Construction Resilience: Even with seasonal slowdowns, demand for newly built homes remains strong. Builders are getting creative with incentives, making new builds a very viable path for those frustrated by low inventory in the existing home market.
• The Climate & Insurance Factor: We can’t ignore that insurance costs and climate concerns are reshaping where people want to live. States like Florida and California are seeing more scrutiny from buyers, while “resilient” cities like Atlanta, Nashville, and Dallas are becoming new favorites for those seeking long-term stability.
Looking Ahead
Next week, the Fed enters its “blackout” period, meaning we won’t hear much from Fed officials. Instead, the market will be laser-focused on the upcoming GDP and inflation data. While there’s some global “noise”—like trade tensions, Greenland, and shifting international bond holdings—the domestic picture remains remarkably resilient.
I know that navigating interest rates, insurance hikes, and inheritance planning can feel overwhelming. My door is always open if you want to chat about how these trends affect your specific situation. I’m here to make sure you feel confident and cared for in your real estate journey.
