Mortgage interest rates have taken a welcome step lower in the past nine days—and that means homeowners have a fresh opportunity to refinance.
According to Freddie Mac, the 30-year fixed mortgage rate slid to 6.35% the week ending September 11, down about 0.15% from the prior week.
The 15-year and 20-year fixed fell as well, landing around 5.875%.
For investment properties and 2nd homes, we are seeing rates in the mid 6% range, as well.
Other industry surveys—Bankrate, Money.com, and Reuters—are showing similar declines across the board.
What’s Driving the Drop
The reason for the dip lies in the bond market. The 10-year Treasury yield, which heavily influences mortgage rates, has retreated in recent days.
Investors are increasingly betting that the Federal Reserve will begin cutting short-term interest rates later this month.
Combined with softer labor market data and easing inflation pressure, long-term yields have fallen—and mortgage rates have followed.
Treasury Dips Don’t Last Long
If this feels like déjà vu, that’s because it is. Since mid-2023, there have been eight significant downward moves in the 10-year Treasury yield.
You can see them highlighted in the chart above.
Each one of those dips lasted anywhere from just three days to three weeks before the trend reversed and rates climbed again.
That’s the key takeaway: lower-rate windows don’t last long. Waiting to see if rates fall further often means missing the opportunity altogether.
Why Refinancing Now Makes Sense
If you bought a home within the past two and a half years, there’s a good chance your mortgage rate is higher than where the market is today.
Even a small rate reduction can create meaningful monthly savings and improve long-term financial flexibility.
If you’ve recently completed a cash-out refinance, now may be an especially smart time to review your options. Lowering your interest rate can reduce the cost of carrying that debt, even if you pulled equity from your home earlier this year.
Beyond lowering monthly payments, refinancing may also help you:
Switch from a 30-year to a 15- or 20-year term, paying off your home faster.
Consolidate higher-interest debt into your mortgage at a lower rate.
Remove mortgage insurance if you’ve built enough equity.
The Time to Act Is Now
Rates are still volatile.
Inflation readings, labor reports, and Federal Reserve announcements can all shift the bond market quickly. The history since 2023 is clear: when Treasury yields dip, mortgage rates dip too—but they rarely stay down for long.
That’s why now is the time to act.
If your current mortgage is above today’s averages, let’s run the numbers together. Locking in while rates are on the downside could secure savings that last for years to come.
Here’s The Bottom Line
Lower rates don’t wait around. If you’ve bought a home in the past 2.5 years or completed a recent cash-out refinance, this is your window to refinance into a smarter mortgage.
Reach out to me today to make sure you are not missing out and we can begin to explore options.
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
Let’s take a look at what’s happening in the economic marketplace through the end of April 2025…and how this might impact real estate sales and mortgage rates moving forward.
Economic updates through April of this year revealed that the labor market showed some weakness, first quarter economic growth contracted, the Fed’s preferred inflation measure slowed, and home prices continued their upward trajectory.
Here are more details on these key developments…
April Jobs Report: Looking Beyond the Headlines
April brought a surprise with 177,000 new jobs added – well above the expected 130,000, according to the Bureau of Labor Statistics (BLS). The unemployment rate remained steady at 4.2%.
What’s the bottom line? While April’s headline number appears strong, it’s important to remember these figures will be revised in coming months. Recent history suggests caution – the first three months of 2025 all saw significant downward revisions (January: -32K, February: -49K, March: -43K). If April follows this pattern, the actual job growth may fall below forecasts.
In addition, the BLS birth/death model, which estimates small business job creation, added a whopping 393,000 jobs in April. This sharply contradicts ADP’s report showing small businesses added just 11,000 jobs – suggesting potential overestimation.
Another concerning trend is the average unemployment duration increased to 23.2 weeks – the highest since December. This aligns with the ongoing elevation in weekly Continuing Jobless Claims, pointing to persistent challenges in the labor market.
Labor market weakness is a recessionary sign, potentially leading the Federal Reserve to cut its Federal Funds Rate.
Private Payrolls Miss Expectations
April’s private sector job growth came in at just 62,000 positions, falling well short of the anticipated 115,000, according to ADP data. This represents the slowest hiring pace since July, as economic uncertainty appears to be influencing employer decisions. Notably, large companies (500+ employees) added only 12,000 jobs – a significant drop from previous months.
Looking at industry breakdown, leisure/hospitality led with 27,000 new positions, followed by trade/transportation/utilities with 21,000 jobs. Both sectors face headwinds, however, with tourism already slowing and goods shipments expected to decline due to tariff impacts.
Wage growth remained steady, though it ticked down slightly to 4.5% (from 4.6%) for existing employees. Job-changers experienced a modest increase to 6.9% (from 6.7%).
What’s the bottom line? “Unease is the word of the day,” notes ADP Chief Economist Nela Richardson. “Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment.”
Again, this is a recessionary sign, potentially spurring the Federal Reserve to cut its Federal Funds Rate.
The Fed’s Preferred Inflation Measure Shows Progress
Good news on inflation! The latest Personal Consumption Index (PCE) report reveals headline inflation remained flat month-over-month while dropping to 2.3% year-over-year (down from 2.7%). Core PCE – the Fed’s favorite inflation gauge – is now at 2.6%, moving closer to their 2% target.
Meanwhile, consumer spending surged 0.7% in March, possibly as shoppers rushed to beat upcoming tariffs.
What’s the bottom line? Shelter costs remain key to reaching the Fed’s 2% goal, making up 18% of Core PCE. While these costs have stayed stubbornly high in official data, real-time rental reports from sources like Apartment List and CoreLogic show softer trends. As PCE catches up to these real-world rental conditions, we should see inflation numbers continue to improve. When inflation numbers start to drop, mortgage rates will follow.
Home Prices Continue Strong Nationwide Growth
The Case-Shiller Home Price Index – widely recognized as the gold standard for tracking home values – reported a 0.3% seasonally-adjusted increase from January to February.
Year-over-year, national home prices grew by 3.9% in February, slightly down from January’s 4.1% gain. Major cities showed even stronger performance, with the 10-city composite rising 5.2% and the 20-city index up 4.5% compared to last year, demonstrating that urban markets are outpacing the national average.
In a separate report, the FHFA House Price Index showed a modest 0.1% monthly increase and a 3.9% yearly gain. Unlike Case-Shiller, FHFA’s data only tracks homes with conventional mortgages, excluding cash purchases and jumbo loans.
What’s the bottom line? Case-Shiller reports that “home prices have shown notable resilience” despite affordability challenges and high interest rates. This resilience means homeownership continues to be a powerful wealth-building tool. For perspective: if you own a $600,000 home that appreciates by 4% annually, you’d gain $24,000 in equity in just one year – an impressive return on your investment.
Other Economic Highlights
U.S. Economy Contracts: The U.S. economy declined 0.3% in Q1 2025, according to the Bureau of Economic Analysis’ advanced GDP report. This contraction primarily stemmed from increased imports (ahead of tariff implementation) and reduced government spending, partially offset by growth in investment, consumer spending and exports.
Housing Market Activity Improves: Pending Home Sales (signed contracts on existing homes) jumped 6.1% from February to March – marking two consecutive monthly increases. NAR Chief Economist Lawrence Yun attributes this surge to lower mortgage rates in March and suggests it “implies a sizable build-up of potential home buyers.”
Labor Sector Weakening: Initial Jobless Claims hit their highest level since February at 241,000, while Continuing Claims jumped by 83,000 to 1.916 million – the highest since November 2021. In addition, job openings fell to 7.192 million in March, continuing their decline from 2022 peaks. Remote work may inflate these figures through multi-state postings, potentially concealing even fewer actual openings. The job vacancies to unemployed ratio has dropped from 2:1 in 2022 to 1:1, signaling deteriorating labor market conditions.
What Does All of This Mean?
It does appear that economic activity is slowing – and it really has been over the last 6+ months. Most of these indicators are pointing toward a recession…which actually is good news for home buyers and home owners. Mortgage rages generally go down during recessions and home values usually go up during these periods.
Please do reach out to me for more, as I’d be glad to go through these data points with you and help put a purchase plan together!
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
Attention real estate agents and investors…I have a new tool available for you to share with you or your clients who are waiting and trying to “time the market”.
So many consumers have been delaying a home purchase as they hold out for interest rates or home prices to drop.
My reporting tool helps demonstrate how delaying a purchase for even a year or two could cost buyers thousands in appreciation, amortization, equity and more.
The Report
For example, if a buyer opted to wait on a $800K purchase, thinking that mortgage rates would drop by nearly three-quarters of a percent (from 6.75% to 6.125%).
In fact, they would actually only save $74/month in their mortgage payment…but would miss out on over $35,000 in appreciation over that year.
Secondly, they could easily purchase now and refinance in a year – and still have a net benefit of buying now of over $30,000!
Here are the specifics:
This Cost of Waiting tool will help show you or your buyers how delaying their purchase could have more of an impact on their long-term wealth than they realize.
Reach Out to Me
I can provide this information to you at any time, so please reach out to me and find out more. You can schedule a time to go through this tool with me here…as it would be my pleasure to help you!
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
I’m asked regularly about mortgage rates – and how they behave relative to the Federal Reserve and their Federal Funds rate.
While it might seem intuitive that changes in the federal funds rate should directly affect mortgage rates, the relationship between the two is more complex.
Mortgage rates do not move in lockstep with the federal funds rate due to multiple factors, including the role of longer-term bonds, overall market dynamics, and investor sentiment.
Let’s take a closer look…
The Role of the Federal Funds Rate
The federal funds rate is the interest rate at which banks lend reserves to each other overnight. It is set by the Federal Reserve as a tool to control monetary policy, with the goal of managing inflation and stimulating economic growth.
When the Federal Reserve raises or lowers this rate, it directly affects the short-term borrowing costs for banks, which can influence consumer rates for products like credit cards and auto loans.
However, it is much more indirect when it comes to mortgage rates, which are typically tied to other longer-term financial instruments. The federal funds rate is a short-term rate, while mortgages often span 15 to 30 years, leading to differing influences on these financial products.
Influence of Longer-Term Bonds on Mortgage Rates Mortgage rates are more directly influenced by the yields on long-term bonds, particularly the 10-year U.S. Treasury bond.
Investors use the yield on these bonds as a benchmark for determining mortgage rates, as they represent a relatively safe long-term investment. When the yield on 10-year Treasury bonds rises, mortgage rates often follow suit, and when it falls, mortgage rates tend to decrease.
This connection is much stronger than the relationship between mortgage rates and the federal funds rate because both mortgages and Treasury bonds are long-term financial commitments that reflect broader economic expectations over time.
Market Forces and Supply-Demand Dynamics
The supply and demand for mortgage-backed securities (MBS) also play a significant role in determining mortgage rates.
Banks and mortgage lenders often bundle mortgages into securities and sell them to investors, and the demand for these securities can influence the rates that lenders offer to consumers. When demand for MBS is high, lenders can offer lower mortgage rates, as they can sell the bundled mortgages more easily at favorable terms.
On the other hand, when demand for these securities fades, lenders must increase mortgage rates to make them more attractive to investors. This dynamic operates independently of changes in the federal funds rate, as it is more tied to market sentiment and investor appetite for longer-term fixed-income investments.
Impact of Inflation Expectations
Inflation expectations are another key factor that drives mortgage rates, often with minimal direct influence from the federal funds rate.
Mortgage lenders are keenly aware of inflation risks over the life of a loan, which can erode the real value of the fixed interest payments they receive. If inflation is expected to rise, lenders will demand higher mortgage rates to compensate for the anticipated decrease in purchasing power.
Alternatively, when inflation expectations are low, mortgage rates usually drop – or stay hover at a lower rate. The federal funds rate does influence inflation to some extent, but the relationship is not always immediate or proportional, resulting in instances where mortgage rates may not track movements in the federal funds rate.
Global Economic Factors and Risk Aversion
Mortgage rates are also influenced by global economic conditions and risk aversion among investors.
For example, during periods of global economic uncertainty, investors often flock to safe-haven assets like U.S. Treasury bonds, driving their yields down and potentially lowering mortgage rates in turn. This dynamic was particularly evident during the 2008 financial crisis and the COVID-19 pandemic, where mortgage rates fell despite significant volatility in the federal funds rate.
This illustrates that external economic factors and the global appetite for safe investments can decouple mortgage rates from domestic monetary policy changes, creating a gap between mortgage rates and the federal funds rate.
The Role of Mortgage Lender Pricing Strategies
Individual mortgage lenders also play a role in determining rates through their own pricing strategies, which can introduce further variations. Lenders adjust their rates based on competition, risk assessments, and internal profit targets.
These adjustments mean that even if the broader market conditions suggest a decrease or increase in rates, lenders may not always follow suit immediately.
For example, during times of economic stress or uncertainty, lenders may keep rates higher to offset increased risks of defaults. This autonomy in pricing further weakens the direct relationship between the federal funds rate and mortgage rates.
The Delayed Response of Mortgage Rates to Rate Changes
Even when changes in the federal funds rate indirectly influence mortgage rates, the response is often delayed.
When the Federal Reserve adjusts the federal funds rate, it can take months for the effects to filter through the economy and reach the mortgage market. This lag occurs because it takes time for banks to adjust their lending practices, for market expectations to shift, and for the impacts on inflation and economic growth to become clearer.
During this time, other factors, such as changes in the housing market, shifts in investor sentiment, or unexpected economic data, can alter the trajectory of mortgage rates independently of the federal funds rate.
In Conclusion
While the federal funds rate plays an important part in shaping broader economic conditions, it does not directly dictate mortgage rates due to the factors mentioned previously.
Mortgage rates respond more directly to the yields on longer-term bonds like the 10-year Treasury and are subject to a range of market forces that the federal funds rate cannot control.
If you’d like to find out more, or have a detailed conversation about mortgage rates and where they might be headed, don’t hesitate to reach out to me, as it would be my pleasure to help in any way I can!
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
Those who have been waiting for mortgage rates to come down have missed a huge financial opportunity.
Home prices rose 6% in 2022, 6% in 2023 and 4% so far year-to-date in 2024.
That means over the last 30 months home prices have risen on average 17% compounded.
Using a median home price of $350K 30 months ago – if you waited for rates to improve, you would have missed a $60,000 wealth creation opportunity.
But don’t let those statistics discourage you. Now’s a very good time to purchase, as appreciation gains look likely for the near future!
What the Experts Are Saying
Case-Shiller’s lead analyst, Brian Luke said “while annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging. Our home price index has appreciated 4.1% year-to-date, the fasted start in 2 years”
He goes on to talk about the cost of waiting, saying “the waiting game for the possibility of favorable changes in lending rates continues to be costly for potential buyers as home prices march forward.”
Mortgage Rates
Mortgage rates are near 12-month lows – as inflation seems to be coming down and the unemployment rate has moved higher.
Both of these are potential recession indicators, meaning that the Federal Reserve may cut the Federal Funds rate shortly. You can find out more here…
Pricing Pressure Ahead?
As rates move lower, more buyers will become eligible to purchase. In fact, the National Association of Realtors states that for every 1% decline in mortgage rates, 5 million more people can be eligible to buy.
Even if a small fraction of these eligible buyers decides to move forward, it will likely pressure prices higher and shrink the number of available home choices even further. More on that here…
The Bottom Line
Home price appreciation remains strong, despite higher mortgage rates and slightly increasing inventory.
Home values continue to set new all-time highs, and housing still proves to be one of the best investments out there. If you’ve been thinking about purchasing, now is a good time to do it!
Do reach out to me and we can strategize about your next purchase or refinance!
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
Thomas Eugene Bonetto
Mortgage Loan Originator
NMLS: 1431961
About The Coach
Tom Bonetto has been helping his customers and players achieve their best for nearly 30 years. His goal is to provide both a superior customer experience and tremendous value for both his business associates and his players alike.
