Mortgage Rate Trends

The recent decline in mortgage rates—staying below 6.5% for most of September—is a meaningful shift for housing. Though it may not feel like much for those accustomed to 2% or 3% rates, even small drops can have a major impact on affordability.   For example, moving from 7% to 6.5% puts 2.125 million more households in a position to buy. If rates were to fall to 6%, that number more than doubles, pricing in another 4.246 million households.   That said, it's important to consider the underlying reason behind the decline: the cooling labor market. Our historical research shows a consistent two-phase dynamic between the economy and housing:   Phase 1. A slower job market initially reduces housing demand despite lower rates. This is driven by job insecurity and weaker consumer confidence. Phase 2. Falling interest rates eventually outweigh those headwinds, helping revive sales activity.   Right now, the housing market is still in Phase 1. This is consistent with the historical pattern where housing acts as a leading indicator—it slows before the broader economy but also turns the corner sooner. Zonda Alexander Edelman Trevor Tetzlaff Sean Fergus Sarah Bonnarens Tim Sullivan Keith Hughes Cameron McIntosh Kyle Cheslock

Back on recession watch, Leading Indicator #2 – the FHA mortgage delinquency rate. This isn’t typically in lists of leading economic indicators, but it may be a proverbial canary in the coal mine in the current context. FHA borrowers have low to moderate incomes, with a median income of about $75,000 a year, and most are first-time homebuyers. Judging from the recent increase in the delinquency rate on FHA loans, these households are under mounting financial stress. This is despite the exceptionally low 4% unemployment rate and goes in part to the credit characteristics of the borrowers, including lower credit scores and downpayments. Even more important may be their high debt-to-income ratios. With mortgage rates and house prices as high as they are, borrowers have to shell out a big share of their income to their mortgage payment to get into a home. They may have gambled that rates would fall and could refinance, bringing down their payment. However, the Fed’s higher-for-longer rate policy and quantitative tightening have forestalled that exit strategy. Combine this with higher homeowner insurance premiums and property taxes, and borrowers struggle to make mortgage payments. What happens when the job market wobbles even a little bit? Thus, why this is a good statistic to include in our recession watch. Not that the financial troubles of FHA borrowers are enough to push the economy into recession. Indeed, high and middle-income mortgage borrowers are having no trouble making their payments at this time – the gap between the FHA delinquency rate and those on Fannie and Freddie loans has never been as large. But if the economy is headed for trouble, it is FHA borrowers who will signal it first. And they are. #rates #FHA #income #recessionwatch #fed

How are Middle East tensions impacting the housing market? Our latest Zoopla HPI is out today and has the latest on current trends The sales market is still moving — but the balance between sales and demand is shifting. Recent tensions in the Middle East have pushed mortgage rates higher and raised fears for inflation and the cost of living. This is starting to feed through into buyer behaviour. Demand is down on last year but sales agreed are holding up as serious movers support sales. Buyer demand has been running below last years levels over Q1 - events in the Middle east saw the gap widen over March and buyer demand is running 13% below last year (as at 22 March) However, talk of a possible deal last week has seen the gap narrow over the last week as buyers digest the news and more are returning to the market. Buyer demand is more volatile than sales agreed which are down just 2%. Record numbers of homes for sale mean many serious movers in the market who can only hold off on plans for so long where it cam take many months to find a home and complete a sale. What we see is fewer people are entering the market, but those who remain are more committed - often with mortgage offers agreed or a clear need to move. These “serious movers” are keeping transactions flowing, even as some early-stage buyers adopt a ‘wait and see’ approach. For buyers, this means: - Less competition - More choice - But tighter affordability if no mortgage rate locked in For sellers: - Homes are still selling - But pricing and presentation matter more House price growth remains stable for now (+1.3% annually), but the outlook depends on what happens next with mortgage rates and buyer confidence. The takeaway: Sales activity isn’t slowing - it’s becoming more selective, and increasingly reliant on a smaller pool of committed buyers. #housing #estateagents #newhomes #mortgage #property

Pending Home Sales Deliver a Major Upside Surprise The National Association of REALTORS® released its Pending Home Sales Report this morning, offering one of the most forward-looking reads on U.S. housing demand. Unlike existing-home sales, which reflect transactions already completed, pending home sales track homes under contract and capture buyer intent earlier in the decision process. Pending home sales jumped 3.3% month over month in November, far exceeding expectations, and rose 2.6% from a year earlier. Gains were broad-based across all four regions, with the Pending Home Sales Index climbing to 79.2 from 76.7, its strongest level in nearly three years after seasonal adjustment. The timing matters. This surge follows last week’s existing-home sales report, which also showed a modest increase. Taken together, the two releases suggest November’s improvement was not simply the clearing of older transactions delayed by earlier rate volatility. Activity appears to be strengthening at multiple points in the housing funnel, from contract signings to closings, pointing to renewed buyer follow-through rather than residual momentum. That distinction carries broader economic implications. Housing is among the most interest-sensitive sectors and often serves as an early signal of shifts in household behavior. Rising pending sales indicate consumers are becoming more willing to make large, long-term financial commitments even as mortgage rates remain elevated by historical standards. Rather than waiting for perfect conditions, buyers appear to be recalibrating expectations and moving forward as conditions stabilize. Improving housing intent tends to ripple outward. Increased contract activity supports demand for mortgage lending, insurance, real estate services, and, over time, spending on home improvement, furnishings, and local services. While this report does not signal a return to excess, it suggests the drag housing has placed on economic growth may be easing. Mortgage rates have eased modestly, wage growth continues to outpace home price gains, and inventory is more available than a year ago. That combination appears sufficient to unlock sidelined demand without reigniting unsustainable acceleration. The picture that emerges is one of adjustment rather than exuberance. Havas Edge tracks pending home sales closely because they reveal shifts in consumer intent and economic behavior before those changes appear in completed transactions, credit data, or broader consumption trends.

Housing starts come in below consensus estimates (1.335 million) to a seasonally adjusted annual rate of 1.311 million in October. Housing starts were down -3.1 percent from last month, weighed down by groundbreaking on single- family projects (-7 percent MoM, -0.5 percent YoY). While builder sentiment climbed to its highest level in seven months in November, it remains in negative territory (below the breakeven mark of 50). Single-family permits, a leading indicator of future housing starts, increased +0.5 percent compared to last month. While builder sentiment is in negative territory, builders are increasingly confident about selling newly constructed homes. Of the index’s three components, builder sentiment on sales expectations for the next six months jumped seven points to 64—the highest since April 2022. How do we make sense of rising builder sentiment and a decline in SF housing starts? Demand for new homes remains a bright spot, contrasting sharply with weakness in existing-home sales. Builders’ ability to offer incentives and higher inventory of new homes for sale supports this relative strength. Despite this optimism, recent mortgage rate volatility serves as a reminder that elevated financing costs could temper a broader housing market recovery. Mortgage rates have trended upward since October, driven by stronger-than-expected economic data and hawkish signals from the Federal Reserve. Additionally, builders continue to face headwinds, including high construction costs and skilled labor shortages. Looking ahead to 2025, my baseline expectation is that single-family home construction is poised to steadily increase, bolstered by modest declines in financing costs for builders and buyers and by the scarcity of existing homes due to the mortgage rate lock-in effect.

The housing market is shifting. Nearly 15% of U.S. home purchase agreements fell through in June, according to Redfin—up 1% from a year ago and the highest June figure since tracking began in 2017. At first, this stat might seem puzzling. After all, isn't there supposed to be pent-up demand, especially among Millennials and Gen Z? So, what’s behind this? Well, according to the report... • Some buyers are using inspection contingencies to walk away after spotting an issue or discovering a better home • Mortgage rates remain stuck in the upper mid-6% range, and some buyers are hoping for a drop • And in some cases, shoppers are simply more cautious amid economic uncertainty Still, the Redfin data isn’t revealing a sudden change—it’s part of a broader trend I’ve been tracking throughout 2025: the shift to a buyer's market. In my latest Housing Market Predictions piece, I covered how home price growth has been slowing and inventory has been steadily improving since the start of the year. That extra supply, combined with sticky mortgage rates, has given buyers a little more breathing room and negotiating power in a still-pricey housing market. Even so, it's important to remember that housing trends remain deeply regional. For example, affordable markets in parts of the Midwest and Northeast, which didn’t experience the extreme price surges of the pandemic years, are seeing strong buyer demand and competitive conditions. In contrast, areas like Florida and parts of the West, where insurance costs and high home prices are causing concern, and where rapid home building in recent years is now offering buyers more choice, are experiencing more deals falling through. If you’re wondering where the housing market is headed for the rest of 2025, here’s the breakdown of the trends I’m watching: https://lnkd.in/eAfHPdQn Forbes Advisor

According to the latest data from the Mortgage Bankers Association, the 30Y fixed mortgage rate sank to 6.87% for the week ending July 12, the lowest since March. Mortgage rates are flat against last year. However, thus far, the drop in mortgage rates has done little to boost housing transactions, but has helped existing mortgage holders refinance. For the week ending July 12, mortgage loan applications for purchase declined 2.7%, the second drop in the last three weeks. The level of purchase demand is at its lowest since May. By contrast, mortgage loan applications for refinancing jumped 15.2% over the week to the highest level since August 2022. Good news for consumption as households free-up some cashflow, but no meaningful impulse for residential investment, at least not yet. 

The RBI’s decision to reduce the repo rate by 25 basis points to 5.25% comes at just the right time. With inflation easing to a historic low of 0.25% in October, this move strikes the perfect balance by giving a push to growth while maintaining overall economic stability. For real estate, this is more than a policy update. It’s a confidence signal. Lower lending rates mean better affordability for homebuyers and greater conviction among those who’ve been waiting for the right moment to invest. As home loan rates inch below the 8% mark, we can expect this momentum to translate into real action on the ground. Coming right after the festive season and leading into the new year, this sentiment boost will only add fuel to the sustained demand we’ve seen over the past two quarters. The timing couldn’t have been better. #RBI #RepoRate #RealEstate

The national average mortgage rate is now 6.1%, the lowest in 2 years, and down from 7.2% in May, per a report from Freddie Mac. However, as of July, the average outstanding mortgage rate was 3.9%, barely budging from where it has been for years - per a Weekend WSJ report. In other words, nearly every borrower is sitting on 30-fixed rates they obtained when rates were very low in 2020-2021 or before. So in other words, the September rate cuts are likely to do nothing for the mortgage market. The dynamic hasn't changed; the current (marginal) mortgage rate is over 200 bps higher than the average outstanding mortgage rate. Thus the affordability of housing, which has been a major factor in the increased inflation rates since 2021, is unlikely to be affected - yet - by rate cuts. Your guess is as good as mine as to when it will have an impact. But if I had to guess, I would say that once the 30-fixed hits about 5.25% (i.e., the 10y UST goes down another 50-75 bps), we could see the animal spirits released in the housing market again. It's still 135 bps above the national average outstanding rate, but Americans are optimists. Once the monthly payment feels doable, more people will start to move around again, and do their cash-out re-fi's. And even then we will likely see serious price adjustments along the way both up and down as the supply curve and demand curve dynamic seeks a new equilibrium. The other complication with our housing stock is the lack of supply. Lower rates will drive both home building as well as simply trading up and re-fi's. That is the real need now - more housing supply. Luckily, there has been no uptick in mortgage delinquencies, as we have seen in auto loans and credit cards. Banks learned their lessons in 2008 and underwriting has continued - for the most part - to be strong and generally on the conservative side. For most Americans, home ownership is their greatest source of wealth. So it's an important market to watch, particularly as the Fed continues its rate-cutting cycle into 2025. #fedpolicy #interestrates #riskmanagement

Portugal’s housing boom is not the result of organic prosperity, but of external drivers: special tax regimes, foreign capital inflows, mass tourism, and a decade of cheap money. All this collided with a rigidly inelastic supply - scarce land, slow licensing, low construction productivity. The result? Asset inflation disconnected from wages. Households see paper wealth on balance sheets, but their cash flows erode under soaring rents and long-term mortgage debt. This is not sustainable growth - it is exclusion masked as prosperity. Italy shows the opposite trap: demographic stagnation and weak demand driving long-term deflation. Different symptoms, same instability. The mantra “buy today, sell tomorrow at a higher price” is not strategy, it’s sales rhetoric. Economics is written in fundamentals - when those diverge from asset prices, correction is inevitable. #RealEstate #HousingCrisis #AssetBubble #EconomicReality #Leadership #Strategy #Sustainability