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Mortgage Rates Quietly Fall to Lows of 2025
While President Trump and FHFA Director Pulte continue to call for lower rates, mortgage rates have quietly marched down to their 2025 lows.It’s kind of funny to see it play out because they’ve been barking up the wrong tree, yet still seeing desired results.That wrong tree is Fed Chair Powell, who along with the other Fed members does not set consumer mortgage rates.Despite that, it seems that almost daily he’s lambasted for waiting to cut rates, which makes you wonder if it’s a more elaborate move to cast blame if things go sideways.In any event, the 30-year fixed is now near its best levels of 2025, and could get even better.The 30-Year Fixed Mortgage Is Inching Back Toward 6.50%Sure, 6.50% didn’t sound too hot back in 2022 when the 30-year fixed was still in the 3-4% range, but what a difference a few years make.This is the beauty of the human mind, which makes adjustments after being exposed to changing conditions.With regard to mortgage rates, once you see 8%, 6-something doesn’t sound half bad anymore.You might forget (to be fair, not completely) where mortgage rates used to be, and just be happy they aren’t as bad as they were.For reference, the 30-year fixed ascended past 8% in October 2023, before beginning to enter a falling rate trajectory. Albeit one with ups and downs along the way.Now mortgage rates are just about at their lows for the year, 6.67% at last glance, the only exception being a couple days in early April when the trade war had rates dipping to 6.60%.But that was very short-lived, and most probably missed it anyway. So for all intents and purposes, this is pretty much the bottom for rates in 2025 thus far, at least per MND’s daily rate.In fact, we’re kind of back to October 2024, and if we keep moving in the right direction, we could get back to September 2024 when rates neared 6%.That seemed to get things cooking again, so you have to wonder if it’ll recharge the flagging housing market if we get there once more.Watch Out for the Jobs Report on Thursday!While there’s hope mortgage rates could continue to inch lower this week, we’ll need a cool jobs report on Thursday to keep the momentum going.The jobs report tends to be the most important data point when it comes to mortgage rates, especially today with all eyes now on labor instead of inflation.Sure, inflation is still a concern, especially with all the unknowns related to tariffs, but jobs have taken center stage as bond traders fret about the health of the economy.Forecasts are calling for a pretty weak jobs report as is, with just 110,000 new jobs created in June, down from 139,000 a month earlier.The unemployment rate is also expected to climb to 4.3% from 4.2%, while wage growth is expected to slow.Assuming that all happens, mortgage rates could break even lower, though if jobs data is unexpectedly hot, the opposite could happen. So watch out!Either way, I expect a lot of rhetoric from Trump and perhaps Pulte on mortgage rates being too high, and for the Fed to keep cutting.Three Fed Rate Cuts in 2025 Back on the Table?Interestingly, the odds of the Fed cutting are rising by the day, and we somehow might be back to three cuts for 2025, assuming the CME forecast pans out.Just remember that the Fed cuts don’t translate to mortgage rate cuts. The two are loosely correlated.But if the Fed is cutting, chances are the 10-year bond yield will also be dropping beforehand and so too will mortgage rates.And we might even see some of those more aggressive 2025 mortgage rate forecasts (including my own) come to fruition.I’ve been saying for a while that there was still plenty of year left, despite many others throwing in the towel on mortgage rates for 2025.So hang in there and perhaps things will turn out better than expected.Read on: Is the Magic Number for Mortgage Rates Now Anything Close to 6%? Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)
Pulte plans 'full scale review” of credit bureaus
Bill Pulte, the head of an oversight agency for mortgage giants Fannie Mae and Freddie Mac, is planning "a full scale review" of the credit bureaus.The director of the entity formerly known as the Federal Housing Finance Agency posted the statement on X Friday afternoon, and subsequently indicated on early Monday he also wants to change the wording around another factor in the secondary market that can affect mortgage rates lenders offer consumers."We are looking into changing the name of 'LLPA' to just 'pricing," said Pulte, who now calls FHFA U.S. Federal Housing, in a separate social media post. The acronym refers to loan-level price adjustments Fannie and Freddie make for mortgage characteristics that could be negative, such as a low credit score.Pulte also reaffirmed past statements indicating he's "not happy with" with industry's main score provider, has heard the industry's concern about higher credit cost and plans to take near-term action, in another recent post.Score provider FICO has downplayed its role in higher credit costs, saying the credit bureaus charge a larger amount. FICO and Vantagescore plans have been on track to implement legislatively-mandated advanced score models for Fannie and Freddie, which Pulte said could proceed if it proved efficient.How multiple entities and reports impact mortgage credit costsEfficiency has been a central concern in the mortgage industry's push to implement advanced credit scores and reporting, which could improve the use of alternative indicators to assess borrowers' ability to repay and expand access to safe financing.There has been debate over whether the mortgage industry's traditional use of a tri-merge credit report, combining data from Equifax, Experian, and TransUnion, is truly necessary. A Standard & Poor's study found there wasn't a significant difference in using two credit reports rather than three in line with an FHFA proposed in a Biden era, but separate Transunion research indicated it could cost some borrowers thousands of dollars over the life of their loan.Some legislators have backed the retention of the trimerge for the time being, saying the research into what ending it would mean to date hasn't been sufficient.Mortgage Bankers Association President and CEO Bob Broeksmit said in a blog post that his organization is looking into the viability of using a single score. He noted that other industries do this.One counterargument to using only one score is that mortgages are far larger than other consumer loans and require more careful vetting. "The tri-merge credit report reflects the most accurate picture of a consumer's creditworthiness and is an essential driver of safety and soundness in the mortgage ecosystem," Transunion said in a previous statement.How credit and closing costs in home lending compareFICO scores have been rising in recent years, markedly increasing from 60 cents to $2.75 in 2023, according to a past company blog by CEO Will Lansing. After it eliminated tiered pricing in 2024, the cost increased to $3.50, or around 15% of a $70 tri-merge report. This year it increased to $4.95.Anecdotal evidence suggests hard-pull tri-merged reports used in origination (as opposed to a soft pull for qualification purposes) have cost from $50 to $110, according to the CFPB's call for closing-cost feedback last year"Our profit margin for this product has remained materially unchanged for decades. The only substantial increase in our profit margin occurred in 2016," Transunion said in a response to the closing cost inquiry. Transunion said margin adjustments are made to account for inflation.FICO does have some influence over the credit reporting agencies' pricing, according to the Community Home Lenders of America."While FICO does not set specific prices to the end-use (lender and their customers), their market power allows them to unilaterally raise boundaried wholesale prices to the national CRAs," the trade group noted in a 2024 white paper, adding that the increase gets passed on to resellers.It's also important to note that credit reporting, scoring, and reselling costs are not the biggest drivers of ancillary mortgage expenses, according to the Consumer Data Industry Association and the CFPB."The largest disclosed closing costs are origination fees paid to the lender (including discount points). Title fees (including title insurance, title search, and settlement fees) are the next largest category of closing costs (and loan costs)," the CFPB noted in its request for feedback last year.
Buyers need up to $250K more in income in some cities
Even as some factors causing current affordability challenges show signs of easing, a new study points to how high a barrier many aspiring buyers still have to get over to achieve homeownership. To afford a typical U.S. home currently priced at $367,969, households earning today's median salary would need an additional $17,670 in annual income to meet monthly payments, even with 20% down. With only a 10% down payment, those same buyers would require a raise of $36,287, according to a new report from Zillow. The median priced home now demands a near six-figure salary, the report said. In 2023, the median U.S. household income was $82,168, according to U.S. Bureau of Labor Statistics data.Today's housing affordability data contrasts sharply with the U.S. market of five years ago, when a median salary still offered consumers an opportunity to purchase the median-priced U.S. home. "Affordability remains a steep hill to climb, especially for first-time buyers," said Kara Ng, senior economist at Zillow, in a press release. Elevated cost pressures remain even as the housing market shows consistent signs of thawing this year. Housing indicators show regular softening of home-price growth with small dips occurring in some regions, as reports from several research groups suggest the market is shifting in favor of buyers. Properties sitting unsold for longer, as well as a higher rate of canceled agreements, are both driving a recent bump in supply that applied downward affordability pressure. "While the financial bar has gotten higher, we're also in the middle of the most buyer-friendly spring since before the pandemic for those who can make the finances work," Ng said."To make homeownership more broadly accessible, though, we need lasting solutions, starting with policies that allow more homes to be built in the right places," she also added. Where are the most affordable markets?Although affordability challenges are widespread, several urban markets still have an ample supply of homes meeting median incomes, Zillow reported. Located primarily in the Midwest and Northeast, the number of markets with affordable median prices decreased to just 11 from 39 five years ago, though. Cleveland came in as the most affordable market where the median income earner could buy a typical $244,000 home and still have over $11,500 left at the end of the year. Pittsburgh, St. Louis and Cincinnati followed as the next three markets where housing costs were low enough to still allow home buyers to keep some earnings, with leftover income of $11,244, $4,897 and $4,396 available.On the other end of the scale, California markets had the lowest levels of affordability with four cities requiring six-figure raises for median earners to achieve homeownership. Buyers in San Jose would need $250,000 more in annual income to afford a typical home. In San Francisco, median income would need to increase by over $165,000. Los Angeles and San Diego followed, with approximately $149,000 and $129,000 required each year on median salaries. How high home prices have changed the rental marketThe difficulty in buying an affordable home in desirable markets also led to shifts in the rental housing market. Single-family rental homes now go for 41% more than they did five years ago, Zillow noted. The surge outpaced rent increases in multifamily properties, which rose by 30% over the same period.Over half the rental population was over the age of 40 in 2024, with the median at 42. One-third of rental households include children under the age of 18, Zillow reported last year.
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