Weekly Mortgage Rate Update- 1-28-25

Last week was uneventful

At least where mortgage rates are concerned.  Rates held last week, but didn’t make another move lower. There wasn’t a lot of economic news, but this week is a different story.

Is DeepSeek a “deep fake”?

I couldn’t resist the headline. Over the weekend the release of DeekSeek, China’s version of Chat GPT caused “Risk-off trading.” Risk-off trading is when money flows from stocks to the safety of bonds which in turn helps mortgage rates improve. The TL;DR: Tech companies and investors are flustered over how DeepSeek was able to release a great AI product for far get less money to build and operate, and with less advanced tech than US competitors have been pouring money into building. Most notably without using the latest NVIDIA chips that were thought necessary to advance AI tech. The chips caused NVIDIA stock to soar in recent months as everyone thought that these were going to be necessary for the advancement of AI. The result, is that yesterday NVIDIA sold off over 500 billion market cap.  For frame of reference, that’s the largest drop in market history for a stock. The next few days will tell if this was just another buying opportunity for investors to enter the market, or the beginning of a re-valuation on market prices for AI related services. Most likely the mortgage improvement from this event will be short lived (rates only a skosh better on Monday and not doing much today) unless it truly is the beginning of something more long lasting.

This week is going to be eventful

This is a big economic news week.  The main events are the FOMC meeting concluding Wednesday where we get to see what the Fed is thinking.  Remembering that last week we talked about the one Fed governor who totally changed his tune after the CPI inflation reading was softer than expected. We are watching to see if that is also the view of Powell and other members of the Fed.   There is no rate change expected at this meeting.  Friday we get PCE (Personal Consumption Expenditures) this is the Fed’s main inflation measure. If it comes in softer like CPI inflation last week, then we will most likely see some comparatively better rates. Last week we talked about the shelter inflation readings starting to come down, that is what helped the CPI reading and could possibly help give us a better PCE reading this week. 

Besides economics, we are also watching these possible market moving events for 2025

Debt.  There is 10 trillion in federal debt that must be refinanced in 2025, along with anything we add to it. Former Treasury Secretary Yellen had decided to do most of deficit financing from the past 4 years as short term debt, so it’s all coming due now and needs to be refinanced. Bessent is the new Treasury Secretary and how he handles this will be key to the stability of the bond market and therefore rates.

 

Also, it seems more likely that Fannie Mae and Freddie Mac will exit conservatorship. These private companies were put into conservatorship after the housing crash to stabilize the mortgage industry. It’s long overdue to return them to private companies, but there is concern that taking them out of government control will cause rates to rise because they won’t have the government backstop, but it’s speculation at this point.  I really don’t know all the implications here, but it’s something we will be watching closely and will report on the developments as they come. Maybe it’s time to buy FNMA stock now before it happens, but don’t ask me I bought NVIDIA :)

Today’s Rates

Loan Type

Conventional 30 year

JUMBO 30 Year

FHA 30 year

VA 30 Year

Interest rate

6.875%

7.00%

6.125%

6.375%

APR

7.023%*

7.122%**

  7.135%***

6.52%****

 

LICENSED BY THE CALIFORNIA DEPARTMENT OF REAL ESTATE LICENSE A division of TYKY (DRE #01919683) (NMLS LICENSE #257773)

RATES ARE CURRENT AS OF 1-28-2025.  SUBJECT TO BORROWER APPROVAL, FICO SCORE, LTV AND PROPERTY TYPE

*APR IS BASED ON ESTIMATED FINANCE CHARGES OF $6935

**APR BASED ON ESTIMATED FINANCE CHARGES OF $16,430

***APR IS BASED ON ESTIMATED FINANCE CHARGS OF $10,969 THIS INCLUDES FHA MORTGAGE INSURA

NCE PREMIUM

****APR BASED ON ESTIMATED FINANCE CHARGES OF $8343

FEES INCLUDE 1% POINTS,  $1095 PROCESSING AND $0 UNDERWRITING FEE       


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.

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