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Category: Interest Rates (Page 1 of 28)

Lending Coach Podcast – 2025 Mid Year Real Estate and Mortgage Forecast Review

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Well, 2025 is past the halfway point, so how does my original forecast look relative to what’s transpired in the real estate and mortgage world?

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And what can we expect moving forward into the 2nd half of 2025?

I’d invite you take a listen!

Here’s the link:

Specific Podcast Timestamps:

  • 0:34 – Introduction
  • 2:35 – Interest Rates So Far in 2025 and Real Estate Activity
  • 10:30 – The Fed and Reliable Data – Inflation and Employment
  • 19:50 – US Debt and Inflation
  • 22:56 – Re-visiting January’s Forecast – How Did We Do?
  • 39:40 – What Can We Expect in Mortgage Rates for the 2nd Half of 2025
  • 40:20 – Can Rates Get to the Low 6% Range?  What Might Happen in Real Estate?
  • 41:20 – Pent-up Demand and Home Prices/Buying Opportunities
  • 46:25  – Final Thoughts on the Forecast

I hope you find it interesting, and feel free to reach out directly to me to discuss it further.

As always, you can set up an appointment with me here…

The Lending Coach

Why the Housing Market Isn’t Crashing in 2025

yellow flowers in bloom

With rising home prices and fluctuating mortgage rates, it’s understandable that some are wondering whether a housing market crash is on the horizon. The good news…

a person giving a bundle of keys to another person

Multiple key indicators show that today’s market is fundamentally different—and more stable—than what we saw in 2008.

Discover why the housing market isn’t crashing in 2025—and why now might be a smart time to buy.

Lending Standards Are Much Stronger

One of the biggest reasons for the 2008 crash was irresponsible lending. Today, the average loan-to-value (LTV) ratio is around 28%, compared to 55% in 2008.

That means today’s homeowners have far more equity, which reduces their financial risk and helps maintain market stability.


Risky Loans Are a Thing of the Past

Loans that contributed to the previous crash—like no-document or stated-income loans—are rarely used in today’s lending environment.

person putting coin in a piggy bank

And if they are, they typically require large down payments, which keeps borrowers better protected and less likely to default.


Homeowner Equity Remains Strong

If a homeowner today encounters financial hardship, odds are they can still sell their home and walk away with equity in hand.

That’s a big difference from the Great Recession, when many owners were underwater on their mortgages. Equity equals options—and stability.


Most Homeowners Have Locked in Low Rates

Many current homeowners have locked in historically low mortgage rates, and that’s keeping inventory low.

orange model house among black miniatures

With fewer homes going up for sale and continued buyer demand, home prices are being supported, not pressured downward.


The Bottom Line

Today’s housing market is built on a stronger foundation. Tight lending standards, stable equity, and healthy demand are keeping things balanced.

While no market is entirely immune to change, all signs point to resilience—not a crash.


Ready to Make Your Move?

If you’ve been waiting on the sidelines or worried about “what ifs,” now’s a great time to get expert insight.

Reach out to me and let’s explore your options, understand what you qualify for, and put together a plan that works for your goals and budget.

The Lending Coach

A Game Changer for Borrowers with Limited Down Payment Options – The HOPER FHA Mortgage

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I have a new mortgage product available that can give up to $13,000 in down payment or closing funds for FHA borrowers.  

Best of all, it isn’t a down payment assistance program, it’s actual earned income that is used for qualification purposes and can be utilized any way the borrower would like.

shopping cart with money on top of a laptop

HOPER allows homebuyers to earn up to $13,000 (3.5% of the home purchase price) toward the home purchase—with no repayment, no liens, and an interest rate that’s 1%-2% lower than standard down payment assistance (DPA) options.

Unlike standard DPAs, which often come with higher interest rates and restrictions, HOPER gives buyers real financial flexibility.

Additionally, homebuyers qualify for $10,000-$12,000 in tax credits on average within the first year, allowing them to replenish their savings to create an emergency fund. This financial boost can help set them up for long-term success as a homeowner.

Click here for the link to view a video of the program:

HOPER video link

Who is HOPER, and why are they paying FHA homebuyers?

HOPER is a socially-innovative research organization, studying the positive impact that two cash inflows —up to $13,000 at closing and $10,000-$12,000 within a year after closing—along with financial mentorship has on loan performance. Their goal is to prove, through real-world data, that:

  • Savings rates go up
  • Default rates go down

To conduct this research, they pay FHA homebuyers for their participation, much like a second job.

How can borrowers use the 3.5% up to $13,000 from HOPER?

This isn’t a loan—it’s earned income, meaning borrowers have full control over how they use it:

  • Down payment & closing costs – Reduce their upfront cash needed to close.
  • Interest rate buy-down – Lower their monthly mortgage payment.
  • Paying off high-interest debt – Improve their overall financial standing.
  • Savings – Strengthen their emergency fund.
How HOPER funds can be used

Why would a borrower choose the HOPER program when buying a home?

Here’s why HOPER is a game-changer for FHA homebuyers:

HOPER benefits
  • Receive up to $25,000 in financial support—$13,000 upfront + $10,000-$12,000 in tax credits.
  • Lower monthly costs—Reduce or eliminate their electric bill, protect yourself from rising utility costs.
  • Better loan terms—No liens, no repayment requirements, lower interest rates than DPAs.
  • Flexibility—Use their funds strategically to reduce debt, cover costs, or save.

A Real Example

HOPER example

What is required to participate in this project?

1. Buyers are to complete an online financial education course before buying their home (4-6 hours). This equips them with smart money habits and unlocks the 3.5% of the purchase price up to $13K, which is deposited into their savings club account to be used at closing.

2. Sign up for an online financial mentorship course (to be completed within one year of purchasing your home). This prepares them to make wise financial decisions with the $10,000-$12,000 tax credit they will receive, ensuring they build savings instead of spending it.

3. Undergo an energy assessment on the home they are buying. If solar can offset most of their expected electricity use, your home qualifies for the program.

HOPER requirements

Why is solar a required component of the program?

HOPER’s research focuses on reducing loan default risk. The #1 reason homeowners’ default is a lack of savings, especially in the first five years of purchasing the home.

Many new homeowners report having less than $1,000 in liquid savings, meaning any unexpected expense—a job loss, medical emergency, or car repair—can quickly put them at risk of missing mortgage payments.

man wearing safety glasses and gloves holding solar panels on the roof

Here’s how solar helps:

Immediate savings boost: Home buyers receive a 30% tax credit for their solar system, averaging $10,000-$12,000, which can be used to build an emergency fund. This equates to roughly 5-6 months of mortgage payments, providing a financial safety net in the crucial early years of home ownership.

Long-term affordability: Their electric bill is typically the second-largest home expense after the mortgage. By generating most of their electricity from solar, you lock in energy savings and protect yourself from rising utility rates over time. This makes home ownership more sustainable, reducing the risk of financial strain in the future.

How is the solar paid for?

FHA has made it seamless to include the cost of installing solar directly into your mortgage. This means:

  • The solar system is fully paid for on day one—no separate loan, no extra payments.
  • The cost is simply rolled into your mortgage, so you own the system outright.
  • You still benefit from solar incentives, including tax

What will happen to the monthly mortgage payment?

Mortgage bill and calculator

The borrower’s total housing expenses (mortgage + utilities) will remain roughly the same whether they participate in the HOPER program or not.

For example: if adding solar increases the mortgage by $200/month, their electricity bill will typically decrease by roughly the same amount, keeping the overall monthly costs stable.

Who installs the solar?

To ensure compliance with FHA guidelines and timelines, AHA (Attainable Housing Advocates) will get the buyer an energy assessment with a state-approved solar installer.

Once their home’s energy assessment is completed, AHA will provide a solar quote and breakdown of HOPER benefits, allowing them to make an informed decision.

In Conclusion

Do reach out to me for more on this incredible opportunity.  As a reminder, this is not a down payment assistance program, it’s earned income that can be utilized for a down payment or closing costs. 

Finally, the installed solar system is OWNED BY THE HOMEOWNER – there is no lien on the property whatsoever, so selling the home down the road becomes much easier.

The Lending Coach

Why Home Values Might Surprise You During a Recession

the word recession spelled out with scrabble letters

With whispers of an impending recession, many homeowners and prospective buyers are bracing for a potential hit to home values. It’s a natural concern—economic downturns often bring visions of plummeting markets and financial uncertainty.

But what if the data tells a different story?

potted succulent plants on the bookshelf

Contrary to popular belief, home values have historically performed remarkably well through the vast majority of recessions.

Let’s dive into why this counterintuitive trend holds true and what it means for today’s housing market.

The Recession-Home Value Myth

When we think of recessions, we often picture widespread economic turmoil: job losses, stock market dips, and declining asset values. It’s easy to assume that real estate, one of the largest investments for most households, would take a significant hit.

After all, if people are tightening their belts, wouldn’t fewer buyers mean lower home prices?  Not necessarily:

MBS Highway graph

As you can see, the data paints a surprising picture.

According to the graph above, home values have not only remained stable but often appreciated during most recessionary periods.

This challenges the conventional wisdom and prompts a closer look at the factors driving this resilience.

Why Do Home Values Hold Up?

Several key dynamics help explain why home values tend to weather recessions better than expected:

  1. Limited Housing Supply: During recessions, home construction often slows as builders pull back due to economic uncertainty. At the same time, homeowners may delay selling, opting to stay put rather than risk entering a volatile market. This reduced supply can prop up home prices, even when demand softens.
  2. Low Interest Rates: Recessions typically prompt central banks, like the Federal Reserve, to lower interest rates to stimulate the economy. Lower rates make mortgages more affordable, encouraging buyers to enter the market and supporting home price stability.
  3. Real Estate as a Safe Haven: In times of economic uncertainty, investors and individuals often turn to tangible assets like real estate for stability. Unlike stocks or other volatile investments, homes provide both utility (a place to live) and long-term value, making them a preferred choice during turbulent times.
  4. Sticky Home Prices: Home prices are famously “sticky” downward. Sellers are often reluctant to lower their asking prices significantly, especially if they’re not in financial distress. This resistance to price cuts can keep values elevated, even in a slower market.
Coins growing plants with small home

What the Data Shows

The MBS Highway graph highlights several recessionary periods over recent decades, overlaying them with home price trends. In most cases, home values either continued to rise or experienced only modest declines before quickly recovering. For example:

  • Early 1990s Recession: Home prices remained relatively flat despite economic challenges and began appreciating soon after.
  • Early 2000s Recession: Home values continued their upward trajectory following the dot-com bust with minimal disruption.
  • Great Recession (2007-2009): This is the notable exception, where a housing bubble fueled by lax lending standards led to a sharp decline in home values. However, this was an outlier driven by unique circumstances, not a typical recessionary outcome.

Since the Great Recession, home prices have shown even greater resilience, supported by tighter lending standards, low inventory, and strong demand.

Even during the brief but sharp economic contraction of 2020 caused by the COVID-19 pandemic, home values surged as buyers sought more space and capitalized on historically low mortgage rates.

What This Means for Today

As fears of a 2025 recession loom, the historical data offers a dose of reassurance for homeowners and investors.

While no two recessions are identical, the evidence suggests that home values are more likely to hold steady—or even grow—than to crash.

Here’s why this matters:

  • For Homeowners: If you’re worried about your home’s value, history suggests you may not need to panic. Real estate’s long-term stability makes it a reliable asset, even in tough times.
  • For Buyers: A recession could bring opportunities, such as lower interest rates or slightly less competition in the market. If inventory remains tight, waiting too long might mean missing out on a good deal.
  • For Investors: Real estate remains a compelling hedge against economic uncertainty, offering both stability and potential for appreciation.

A Word of Caution

Hourglass with home in sand

While the data is encouraging, it’s important to acknowledge that past performance isn’t a guaranteed predictor of future results.

The Great Recession showed that extraordinary circumstances—like a housing bubble—can lead to significant declines. Additionally, local market conditions vary widely.

Areas with strong job markets and limited inventory are likely to fare better than oversupplied or economically struggling regions.

Stay Informed, Stay Ahead

The housing market is complex, but understanding the data can help you make informed decisions. The graph from MBS Highway is a powerful reminder that recessions don’t automatically spell doom for home values.

By staying in the know, you can confidently navigate economic shifts.

Whether you’re a homeowner, buyer, or investor, keep an eye on key indicators like inventory levels, interest rates, and local market trends.

Reach out to me for more…

And don’t let recession fears cloud your judgment—real estate has repeatedly proven that it’s built to withstand the storm.

The Lending Coach

Tariffs, Inflation, The Fed…and Mortgage Rates

tariffs and trade usa and china relations

There’s a good deal of uncertainty surrounding tariffs and what they will do to the economy – especially mortgage rates.

In today’s global economy, tariffs—taxes on imported goods—are an important tool used by governments to influence trade and protect domestic industries. When a country, such as the United States, imposes tariffs on products from other nations, it can affect not just the prices of those goods but also the broader economy.

brown and black beans in clear glass jar

One of the key areas impacted by tariffs is inflation, which is closely monitored and managed by the Federal Reserve.

Understanding how tariffs influence inflation helps explain how they complicate the Federal Reserve’s role in keeping the economy stable.

What Are Tariffs and Why Are They Used?

Tariffs are used by governments to make imported goods more expensive, with the goal of encouraging consumers to buy domestically produced products instead.

For example, if the U.S. imposes a tariff on foreign-made steel, American steel becomes more competitive in price.

While this might help U.S. manufacturers, it also raises the cost of materials for other businesses that rely on imported goods, leading to higher prices for finished products.

Tariffs and Consumer Prices

When companies have to pay more to import goods, those increased costs often get passed along to consumers.

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This leads to higher prices for everyday items like electronics, clothing, and food. These price increases contribute to inflation, which is the general rise in the cost of living.

Tariffs can also raise production costs for businesses, which can then slow economic growth or cause companies to cut jobs to balance their budgets.

What Is Inflation and Why Does It Matter?

Inflation refers to the rate at which prices for goods and services rise over time. A low-to-moderate level of inflation is normal and can signal a healthy economy.

However, when inflation rises too quickly, it can erode purchasing power and lead to uncertainty in the market. People may struggle to afford necessities, and businesses might delay investment. That’s why inflation control is one of the primary responsibilities of the Federal Reserve.

You can find out more about inflation and mortgage rates here…

The Role of the Federal Reserve

person holding u s dollar banknotes

One of the Fed’s key jobs is to manage inflation and promote stable prices by adjusting interest rates and using other monetary policy tools.

When inflation rises, the Fed often raises interest rates to slow down spending and borrowing.

Conversely, when inflation is too low, the Fed may lower interest rates to stimulate the economy. Tariffs can interfere with this balance by introducing unexpected upward pressure on prices.

How Tariffs Complicate the Fed’s Decisions

When inflation is driven by tariffs rather than strong consumer demand, it creates a challenge for the Federal Reserve. If the Fed raises interest rates in response to tariff-driven inflation, it could unintentionally slow the economy or increase unemployment.

However, if it does nothing, inflation might continue to rise. This puts the Fed in a difficult position, having to choose between fighting inflation or supporting growth—two goals that can conflict when tariffs are involved.

Real-World Examples

Recent U.S. tariffs on Chinese goods and other imports have demonstrated these effects. Following the trade war between the U.S. and China, prices rose for goods like washing machines, electronics, and industrial materials.

cut off saw cutting metal with sparks

Inflation increased in some sectors, and businesses adjusted by either raising prices or cutting costs.

The Federal Reserve had to carefully analyze these developments when making decisions about interest rates and monetary policy during that time.

Inflation, Mortgage Rates, and Treasury Yields

Mortgage rates are primarily driven by inflation, which erodes the buying power of the fixed return that a mortgage holder receives.  When inflation rises, lenders demand a higher interest rate to offset the more rapid erosion of their buying power.

Fixed mortgage rates and Treasury yields tend to move together because fixed-income investors compare the returns they can get on government and mortgage-backed securities. 

Investors compare yields on long-term Treasuries to mortgage-backed securities and corporate bonds. All bond yields (including mortgage backed securities) are affected by Treasury yields, because they compete for the same type of investor.

Mortgages, in turn, offer a higher return for more risk. Investors purchase securities backed by the value of the home loans—so-called mortgage-backed securities. 

roll of american dollar banknotes tightened with band

When Treasury yields rise, investors in mortgage-backed securities demand higher rates. They want compensation for the greater risk. 

What Really Causes Rates to Rise and Fall?

Mortgage rates are determined by a complex interaction of economic factors, such as the level and direction of the bond market, including 10-year Treasury yields; the Federal Reserve’s current monetary policy, especially as it relates to funding government-backed mortgages; and competition between lenders and across loan types.

Because fluctuations can be caused by any number of these at once, it’s generally difficult to attribute the change to any one factor. 

Although in our current situation, inflation (and the Fed’s fear of it) is the number one cause.  When this is coupled with the large increase in government spending and tariff uncertainty, you see a double dose of fear in the markets.

Conclusion

These are some very interesting economic times, indeed…and not easy for monetary policy specialists.

The Fed must carefully evaluate whether inflation is being driven by consumer demand or by policy decisions like tariffs.

As global trade tensions continue to influence markets, the relationship between tariffs, inflation, and the Federal Reserve remains a critical area of economic concern – and these will all impact mortgage rates.

All of these factors are causing uncertainty in the marketplace, and have negatively impacted mortgage rates in the last month. With that said, inflation really is the key driver…and if those readings come down, mortgage rates will, too.

Do reach out to me to discuss what’s happening in the marketplace and how you might be able to take advantage!

The Lending Coach
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