21 January 2025

Good news for rates this week! Let’s break it down.

Today, we celebrate as long-term mortgage interest rates are finally clocking some wins with a few days of price gains. Green candlestick trading days are positive trading territory (higher yields) which results in lower long-term mortgage rates. See my red circle on the chart below from trading end of last week. GREEN IS GOOD and for today we celebrate!

Need a free, customized rate quote for your mortgage scenario? Connect with me here: https://ascentmortgagepartners.com/kelly-free-rate-quote/

While rate pricing can vary greatly depending on an individual scenario ( for example varies based on an individual’s equity position, loan purpose, occupancy, credit score, just to name a few), Mortgage News Daily is showing we are about .18% better than 10 days ago, so almost a quarter percent. I’ll take it!

Here’s a link to Mortgage News Daily – Rate Index: https://www.mortgagenewsdaily.com/mortgage-rates/mnd#historic-mortgage-rates

What finally brought rates lower after nearly 6 weeks of very challenging conditions?

As per usual, all roads lead back to inflation data. There are two data metrics that have the potential to bring us to a lower rate environment: Higher unemployment ( as a strong indicator that the economy is cooling down) and lower inflation data reports such as Consumer Price Index (CPI). CPI is one of the two most important monthly economic reports, and last week it muscled through and moved the market in our favor. December Core CPI (index for all items less food and energy) rose 0.2% in December, after increasing .3% in each of the previous 4 months.

For the official BLS CPI December report, click here: https://www.bls.gov/news.release/pdf/cpi.pdf

Here is a chart showing Core Consumer Prices (CPI) month over month for the past 6 years:

What’s considered “good” inflation data?

Our Fed has expressed many times over this inflation cycle it wants to see inflation at 2.0%. Our progress towards this goal stalled out near 3% the past several months, not making as much progress to the target as we hoped. This is the largest factor that has led to long-term interest rates continuing to trade in the higher range (per Mortgage News Daily and the chart above near 7.25% in the second week of January 2025).

While markets and rates will continue to move both directions over the coming weeks and months, what we can HOPE for is that inflation continues to improve towards Fed’s goal of 2.0% without seeing the Fed’s additional goal of higher unemployment realized. For me, I’ve never been very enthusiastic about the premise the Fed sees our path out of this inflation cycle should come via a sacrifice from fellow hard-working Americans whom would need to find themselves unemployed in order to convince our Fed and market traders that rates moving lower won’t reverse this inflation improvement trend. I’ll keep hoping we can beat inflation without significant negative impact to job markets.

In summary:

Core CPI helped us in January. Labor market data reports have remained strong through the end of 2024. Due to strong labor data, there are no indicators we are going to see measurable rate improvement in the foreseeable future. Let’s be grateful that overall inflation is trending down and celebrate this past week’s wins with slightly lower interest rates.

Here’s one last helpful chart showing where 2025-2026 rate predictions were as of December 2024:

 

Kelly Cuffe has dedicated the past 18 years to helping individuals and families navigate the path to homeownership with confidence and ease. With her extensive knowledge and personalized approach, she strives to make the mortgage process seamless for every client. Connect with Kelly at (406) 471-0370 or kelly@ascent-mtg.com today to take the first step toward achieving your homeownership dreams.

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