Let’s work together to Crack the Mortgage Rate Code for Metro Detroit. It might seem daunting, and I’m here to simplify it for you. Learn how to predict when mortgage rates will drop.
Next Week’s Rates Predictions 🔮 ~ Let’s Crack the Mortgage Rate Code
Hello, Metro Detroit neighbors! By late Sunday night, I’ll update this blog to show you where mortgage rates are heading for the upcoming week. Instead of focusing on what mortgage rates were daily, it’s more helpful to understand why they’re changing and how to predict those shifts so you know when to lock your rate.
The key is learning how economic trends and upcoming news impact mortgage rates and when they will drop. Bookmark this blog post for weekly insights, and bookmark Today’s Mortgage Rates: Crack the Code & Save💲 for daily updates to stay ahead of the game. This way, you’ll be better prepared to decide when to jump in and find your ideal home at the best time. I recommend you request our newsletter, and I’ll send updates via your preferred text or email.
Why Did Mortgage Rates Go Sky High This Past Week
It started Metro Detroit when the Fed began shifting policies, including lowering interest rates and the elections. The Fed doesn’t control mortgage rates, but its policies affect the bond and securities markets. I’ll explain more below how mortgage rates are determined. Here is where I will show you the WHY and how to predict where they are going. ⤵️
💥Remember, mortgage rates are tied to Wall Street through bonds and securities. Mortgage rates will increase if investors read the tea leaves wrong and retract investing in the bond and security markets. Wall Street wants certainty and low risk. Right now, they have neither. Mortgage Rates base starts with the 10-year Treasury Yield. The yield has skyrocketed🚀 due to the trends below.
What’s Driving the Market ~ Chaos and Confusion
Bond investors can act strangely when fear, hope, and politics collide. Several factors have fueled this frenzy. Friday’s bond market soared to rates we haven’t seen since late 2023. This was due to a strong jobs report; more jobs were added, and unemployment decreased, showing signs of a strong economy. This should be good news. Nope, investors are now looking at no interest rate cuts for 2025, and a strong economy will fuel inflation. Below are some other triggers impacting mortgage rates.
1. Political Curveballs
Uncertain policies can shake investors’ faith. They might panic if they expect big spending or sudden regulation changes. This fear of the unknown often drives wild swings in bond prices.
2. Inflation Jitters
When traders sense inflation might rise, bond demand drops because higher prices hurt returns. Rumors or small data shifts can spark panic selling even if the current inflation rate appears stable, as we experienced last month.
3. Emotional Trading
Big headlines or rumors can spark a stampede. Significant funds may shift positions quickly, creating sharp drops or spikes. Sometimes, it’s not the data but the fear that feeds the frenzy.
Real Estate Impact:
When bond prices shift, mortgage rates may follow. If lenders suddenly align with soaring yields, rates could jump. Homebuyers might face higher monthly costs, and sellers might see fewer qualified offers. Staying informed and ready to act can protect your best interests in a chaotic market.
CNN Fear And Greed Index
Since January, there has been a shift in Wall Street Investments. If you follow the markets, most days, there has been little movement in buying or selling, including bonds and securities, which impacts mortgage rates. I’m back to market watch 👀because investor jitters will affect mortgage rates and your monthly payment. Check out this past week’s trends.
Economic Trends that Affect Mortgage Rates ~ Scroll Through
All the economic reports were favorable up until the election. Unfortunately, we’ll have to wait another 30-day cycle to see how the economy reacts to changes. The daily economic twists and turns can be found in the blog post “Crack Today’s Mortgage Rate ~ What’s Driving the Change. ” Then, I will follow up here with details to better understand the WHY.
Trading Economics Reports ~ Updated 1-15-2025
When we consult the crystal ball 🔮 ⤵️, I’ll show you how these trends have affected mortgage rates over the past week and where we are headed next. On January 10th, the jobs report blew up Wall Street by adding far more jobs than predicted, signaling a strong economy. That caused a firestorm on Wall Street, increasing inflation fears and preventing interest rates from being cut Q1 for 2025. Yield skyrocketed🚀 and the Dow, Nasdaq, and S&P 500 all declined📉.
How to Keep Up to Date ⤵️
For Daily updates: Today’s Mortgage Rate: What’s Driving the Change.” Also, Compare what other mortgage lenders are charging for daily mortgage rates.
- Home Mortgage Rates vs. Home Prices: Now is the time to create a plan. I will walk you through determining whether purchasing is better when prices are lower, mortgage rates are a little higher, and refinance later, or when mortgage rates are lower and home prices are higher. You will then be able to calculate your monthly payment.
- Mortgage Payment Calculator Tools: I have two types of calculators. 1. How much of a home can you afford? 2. Mortgage Calculator for monthly payment.
- Home Prices and Real Estate Trends: You can access the live graphs directly from the Multiple Listing Service. First, you can see county trends. Next, you can dive deeper into trends by City and Price Range. 🎉
- Market Watch Economic Calender ~ The economy reports and your money
- Real Estate Insider: Request our newsletter and have all the essential updates sent right to your 📩 inbox.
Cracking the Mortgage Rate Code
Step #1 ~ Track the 10-Year Treasury Yield ~ Your Base #
To navigate mortgage rates, you must understand that the Federal Reserve ( the Fed) doesn’t directly determine them. Your base number for the daily rates starts with the 10-year Treasury Yield. The best way to describe the 10-year bond market was CHAOS. The base soared, and mortgage rates followed. The only saving grace was that the Feds bundled securities, and the MBS Price gap decreased, keeping mortgage rates lower. For example, if we use the same yield rate of 4.751 + added the average 2024 MBS Price Gap of 2.75 mortgage rates, mortgage rates would have been at 7.5%. 🔮Next week, if the yield stays stable, we could see mortgage rates increase if there is a correction in the MBS Prices. It’s going to be a volatile week again next week.
The following headlines have affected the bond market
- Jobs report fuels Treasury yield surge
- Kiplinger Letter ~ 10 Predictions for 2025
- Inflation fears soar in January on tariff fear
- Strong jobs report give the market investors the jitters
Step #2 ~ 💥Mortgage-backed Securities💥
💥This is the most critical piece of the puzzle💥, navigating mortgage rates in the future, up or down. I’ve dedicated an educational blog post to “Understanding Mortgage-backed Securities (MBS) Effects on Mortgage Rates” (start here). Soon, you’ll master the mortgage rate trends and know when it’s the right time to confidently purchase your new home.
💥How to Calculate Mortgage Rates💥
The graphs below the teal represents the 10-year Treasury Yield Rate . The orange represents the MBS Price Gap rate . Add the two together and you get the mortgage rate which is your top number. Now, the graphs on the left shows “What If Scenario,” highlighting the importance of tracking the MBS Gap and its effect on your mortgage rate. Yield + MBS Gap Rate = Mortgage Rate. The 50 year average for the MBS Price Gap rate was 1.72%. In March of 2020 whent he goverment started propping up the economy the MBS Gap Rate jumped to 2.75%. In order for MBS Prices to go down is simple supply and demand. Investors must see the economy heading to normal and confident in the mortgage market by adding mortgage-backed securites to their portfolio. Increase in demnad will cause the gap rate to go down and mortgage rates. The graph on the right is the actual calculation for each day.
Scroll Through the Weekly Mortgage Rates vs. The What If💥
CLICK THE PICTURE TO ENLARGE THE BAR GRAPH
Mortgage Rate Trends for Last 3 Months
MBS Gap Trends
The 💥most crucial piece of the puzzle💥 regarding when mortgage rates will drop is the MBS Price Gap Rate.⤵️ Even though the yield shot up 🚀, the securities declined, lowering mortgage rates all week. On Friday, MBS Prices declined from the 98.**% range to 97.54. Once the yield stabilizes, we could see mortgage rates adjusted higher to compensate for the MBS Price correction. The MBS Price gap decline is artificial and does not accurately represent future trends in the securities market.
Step #3~ = Freddie Mac PMMS ~ 1-9-2025
When you hear mortgage rates on the news, you hear week-old rates and average forecasts from the Freddie Mac Survey PMMS. Freddie Mac is the Fed underwriting system most banks use to replenish their cash. Freddie Mac will post a survey of loans that went through its underwriting system for the week prior, starting on Thursday and ending on Wednesday. This past week’s survey for Mortgage Rates increased to 6.93%. This report doesn’t tell me the average FICO score, down payment, or lender points. This is a very unreliable source because it is a survey of the past, not the current. If you’re curious about the previous rates, CLICK HERE. If you are looking for current rates, CLICK HERE.
When Will The Mortgage Rate Drop
In early September, I was hopeful that we were on track to see mortgage rates break the 6% ceiling. Then, bam💥October 8th, the yield jumped .035%, the MBS Price Gap increased .035%, and mortgage rates jumped from 6.26% to 6.62%. That was the start of the hot mess again in the bonds and securities market. I went back and reviewed the data from Pre-Pandemic at the start of 2020. When the government shut down in March 2020 and was propping up the government bonds and securities policies, it was the start of the economic hot mess we are in today. Like it or not, the pipper needs to be paid, and we are still paying. Mortgage rates will decrease once we balance the bond and securities market by cutting the deficit and controlling inflation. The jobs market will go from hot to normal, and the Feds can cut interest rates. I am not confident that mortgage rates will hit 6.5% by June. As you can see from the trends below, we have a long way to go.
Mortgage Daily News ~ SHOP & COMPARE Mortgage Rates
That’s why it’s important to understand mortgage rates to negotiate the best deal. Know your FICO score (free with Experian), not your credit score. Shop around, but don’t give out your Social Security number until you find a lender you want to work with.
Negotiate Your Fees and Points
Remember, Metro Detroit, your rate will be determined by the lender you choose and what they charge in points and fees. (Shop around, but don’t give out your social security number.) They will also use your FICO score (know your number) and your downpayment. To explore other lender options and compare mortgage rates, I’ve provided information on what various lenders are changing. Scroll through and view the differences and options as examples. You can also visit Mortgage Daily News and do your calculations. Scroll down and fill out the form.
Understanding and Negotiating Mortgage Rates Let’s Connect ⤵️
Boy, that’s a lot to pack in.🤩 Ready to explore your options to find the right mortgage rates and terms for you in Metro Detroit? Let’s schedule a Zoom call, and we’ll review options so you understand your purchasing power. That includes your rate, property taxes, payment mortgage insurance for loans under 20% down, and homeowners insurance, which will all affect your monthly mortgage payment. We’ll also cover any other questions or concerns you may have. I’ll share my screen to give you a clear view of the market insights and help you make informed decisions. Schedule your appointment today.⤵️
What My Crystal Ball 🔮 is Telling Me Regarding Future Mortgage Rates in Metro Detroit
What We Know So Far
The Feds have stated due to a strong economy, an increase in jobs, and a decrease in unemployment, the likelihood that inflation will increase due to tariffs will not be cutting the interest rate Q1 2025. The Investors on Wall Street fear there will be no interest rate cuts in 2025, and that started the firestorm with the yield increasing every last week.
Like it or not Metro Detroit, politics plays a role in how Wall Street reads the tea leaves, and drama is playing out in the stock, bond, and security markets. The scales have tipped to fear factor. Next week, we’ll get a peak on inflation when the Producer Price Index (PPI), Core PPI, and PPI Year over year are released on Tuesday. The Consumer Price Index (CPI), core CPI, and Core CPI year over year will be released on Wednesday. We have two days of massive inflation news, which will influence the bond market and impact mortgage rates. Sidebar: Retail sales report will be released as well.
Unfortunately, the volatile market throws predictability out the window and upsets Wall Street. Bookmark Crack Today’s Mortgage Rate Code or request our Real Estate Insider newsletter to keep up with daily rates and trends.
Important Dates to Watch for Future Interest Rate Cuts💥
Metro Detroit Neighbors, I’ve had a close👀on the trends for years, and now you can too.
- Jobs Report: February 7th (First Friday of the Month)
- PPI Inflation Report: January 14th
- CPI Inflation Report: January 15th
- The Fed Meeting: January 28th -29th (don’t count on an interest rate cut)
- PCE Report: January 31st
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