Not much movement in the market...here's what to expect this week.

Mortgage Market Update: Week of January 13, 2025

As we progress further into the new year, the mortgage market continues to be shaped by economic conditions, consumer demand, and financial policy shifts. For the week of January 13, 2025, here’s a breakdown of the latest trends, average interest rates, and what prospective homebuyers and refinancers can anticipate.

Average Interest Rates by Loan Type

• Conventional Loans: The average rate for a 30-year fixed conventional loan this week is 6.85%, reflecting a slight increase from earlier in January due to upward pressure on Treasury yields.

• FHA Loans: FHA loan rates remain slightly lower, averaging 6.15%. These government-backed loans continue to offer a more affordable option for first-time buyers and those with moderate credit scores.

• VA Loans: Veterans and active-duty service members can access VA loans with an average rate of 6.25%, providing competitive pricing and attractive terms, including no down payment requirements.

These rates reflect national averages and may vary based on individual factors such as credit score, loan amount, and lender terms.

What’s Driving the Market This Week?

Several factors are influencing mortgage activity this week:

1. Inflation Data: The Consumer Price Index (CPI) report released on January 12 indicated inflation is cooling slightly, but not enough to prompt immediate changes in monetary policy. As a result, rates are holding steady but remain elevated compared to historical averages.

2. Federal Reserve Sentiment: The Federal Reserve’s minutes from their last meeting suggest a continued focus on keeping inflation in check. While no additional rate hikes are planned for January, the Fed’s commitment to a “higher for longer” policy on benchmark rates is indirectly keeping mortgage rates elevated.

3. Strong Employment Numbers: January’s jobs report reflected a robust labor market, which adds to the upward pressure on mortgage rates. High employment typically signals strong consumer spending, contributing to higher demand for housing loans.

What Can Consumers Expect?

For those considering a home purchase or refinance, here’s what to keep in mind for the week of January 13:

• Stable but Elevated Rates: While significant rate drops are unlikely, the market is showing signs of stability. Borrowers should expect rates to stay within a narrow range this week.

• Opportunities for FHA and VA Borrowers: Government-backed loans like FHA and VA mortgages continue to offer slightly better rates compared to conventional loans. If you’re eligible, these can be cost-effective options.

• Refinance Caution: Homeowners looking to refinance should evaluate their current rates versus market offerings. With rates still elevated, refinancing may only make sense if you’re transitioning from an adjustable-rate mortgage (ARM) to a fixed-rate loan or accessing equity for a strategic purpose.

• The Importance of Locking Your Rate: In a fluctuating market, locking in your rate when it’s favorable can provide peace of mind and protect you from sudden increases.

Have questions or need advice? Feel free to reach out—I’m here to help you make the best decision for your financial future.

Chad Robinson
chad@lendingquarters.com
LendingQuarters