The world’s financial markets are currently in chaos as a global tariff trade war escalates. For the first time ever, the Dow Jones stock market dropped more than 1500 points two days in a row. The S&P 500 stock market is down more than 20% in recent weeks, a textbook “bear-market” collapse.
Fear, uncertainty, and panic are beginning to set in. Typically, these types of market sentiments lead to lower rates.
Dow Jones stock market free falling!
But contrary to recent sensational headlines and advertisements, mortgage rates have not had a huge slide…yet. Last week, 30-yr rates fell .15% to their lowest levels thus far in 2025. That has spurred a tremendous amount of refinance marketing activity amongst mortgage companies. But the reality is most folks with rates under 7% still won’t realize much benefit from a refi.
Mortgage Rates are improving, but not as much as the media and advertisements may suggest
If things continue, however, there will be tremendous refinance opportunities for many homeowners. As always, I will keep a watch on the financial markets and reach out when I see realistic refinance opportunities for my clients.
If you are hoping to refinance to a lower rate, temper your excitement for now. Don’t fall for the premature hype being pushed by aggressive mortgage marketing companies. But, it would be a great time to begin the application process with me as we await rates to drop further.
Let’s Get Real about Marketing in the Real Estate Business. It’s common for professionals to automate their advertising by subscribing to marketing content that is created and published by a 3rd party.
But this style of marketing gives zero insight to your brand, skills or personality, and can often backfire when many of your competitors are copying & pasting the same generic marketing materials.
I make a point of creating all of my own marketing content. Call me old-fashioned and inefficient for doing so, but it also makes me genuine and authentic.
We are now 7 months into our industry’s practice of decoupled commissions, meaning a seller cannot be forced to pay a buyer’s agent. Are buyer’s agents still earning commissions in today’s market? Have the industry’s rule changes revolutionized real estate transactions like so many people prophesied?
Redfin reported last month that the average commission earned by a buyer’s agent in the final months of 2024 was 2.37%. Similarly, in all of my team’s transactions since the settlement, the average buyer’s agent commission has been 2.4%, with nearly all of them being paid by sellers not buyers. These are similar to historical levels earned pre-settlement, meaning sellers are still seeing value in buyer agent’s efforts and paying them appropriately.
Exactly one year ago on a prior Get Real episode, I calmly said “sellers will continue to compensate buyer’s agents at similar levels as they do today.” This stoic prediction was right and the loud fear-mongers were wrong.
In this era of sensational social media, please be wary of listening to the loudest people in the room. They may be the most entertaining, but that doesn’t necessarily mean they are the most trustworthy. Bottom line, the role and revenue of Buyer’s Real Estate Agents is alive & well.
I am very excited to pass along a big announcement from two of my biggest competitors. Why?!? Let me explain.
Earlier this week, Rocket Mortgage, one of the largest mortgage companies in the country, spent nearly $2 BILLION to acquire Redfin, one of the biggest names in real estate. You may recall that Re/Max (the largest real estate brand in the world!) did something similar back in 2016 (I wrote about it then too).
They aim to create a “one-stop-shop” experience for clients so they can buy, sell, and finance homes from a single source. Hmmmm, why didn’t I think of that? 😉
The biggest brand names in real estate are joining forces and copying my one-stop-shop business model. Some may say this trend of big companies creating end-to-end consumer “ecosystems” is bad for my business. Should I be concerned about my market share?
Perhaps, but the overwhelming feeling I have is one of flattery. I’m absolutely flattered that the likes of Rocket Mortgage and Redfin, publicly-traded companies valued at BILLIONS of dollars, are trying to emulate us!
The Blue Waters Group has believed from our very beginnings that the customer benefits from competent and compassionate advisors who can offer both mortgage and real estate services. With Rocket Mortgage & Redfin literally spending billions of bucks, no longer is our business model the obscure alternative; it is the one that leading industry players are striving for. No longer is our platform one that I need to defend with blog posts titled Is What I Do Legal?; it is the one that’s copied by others.
We are still unique from these big company aspirations in that our associates are able to offer both mortgage and real estate services (all of us are licensed both as mortgage loan originators and real estate agents) while Rocket simply hopes to pair mortgage and real estate services more efficiently by providing them under the same corporate umbrella. Nevertheless, this week’s move by Rocket Mortgage & Redfin further validates the craft I’ve been honing for nearly my entire career.
Working as both a mortgage broker and REALTOR is not an easy task, but with a 22-year head start on these firms and others who are sure to follow suit, I’m confident The Blue Waters Group will continue to be imitated but never duplicated!
Should you call a big bank to get the lowest rate? Nope!
Let’s get real about big banks. Some folks think that they need to go to a big bank like this one to get the best mortgage rate on their next home loan. When in actuality, nothing could be farther from the truth.
Chase Bank, the largest bank in America, has nearly 5,000 branches just like this one all across the country. In 2022 alone, they spent nearly $3 billion in advertising. So think about it…big banks with big expenses like this they need to earn big time interest on the loans that they issue in order to make a profit.
Last month as an example, I had a longtime acquaintance of mine reach out to me because he was in contract by a new house. He’s a big time depositor with Chase Bank so he reached out and got a home loan quote from them thinking that they would give him a smoking deal. Well, I was actually able to find a lender of mine that offered him an interest rate nearly half a percent lower than Chase’s rate saving hundreds of dollars every month on his mortgage payment.
So here’s the deal…as a mortgage broker over the last 20 years I don’t work with big retail banks that spend billions on advertising and rent. Instead I work with reputable wholesale lenders that have much lower overhead expenses and as a result they and I can offer you better rates.
Let’s Get Real about Luxury Realtors. Some in the industry tout themselves as Luxury Home Specialists. Have you ever wondered what makes them uniquely qualified to list a home on the Street of Dreams here in Los Cerros in Folsom?
After all, helping clients on multi-million-dollar deals should require more sophistication. Personally, the last few $1M+ deals I was involved with were some of the simpler ones I’ve had in recent memory. From my experience it can be easier to sell a $2M luxury home than a $200K mobile home.
Let me get real with you. It doesn’t take unique qualifications to be a luxury REALTOR; it only takes luxury-looking branding. Agents that promote themselves as luxury specialists do not dominate the luxury market. Here in Los Cerros over the past 5 years, only one agent has listed more than one house for sale in this neighborhood, and she only did 2.
If you are looking to buy or sell what you consider to be a luxury property, don’t get suckered by flashy agents. I hate that I even need to say this, but Selling Sunset and Buying Beverly Hills is not real real estate. Instead, stick with the basics. Interview a few agents. Read online reviews from past clients. Look for experience, effective communication, analytical insight, and above all else, honesty.
I’m walking through the newest Active Adult Community in Folsom called Regency by Toll Brothers. There is a much higher concentration of reverse mortgages here than any other part of Folsom. Which makes sense because a Reverse Mortgage is a loan designed for homeowners at least 62 years old and who want to end monthly mortgage payments by utilizing the equity they’ve saved in their home.
These loans have been around for decades, but there’s a lot of misinformation out there about reverse mortgages so let me clear up the basics. In every instance, a reverse mortgage allows you to keep ownership of your home, remove a mortgage payment from your monthly budget, and the unused equity transfers to your heirs upon death.
As an experienced Mortgage Broker, I offer Reverse Mortgages & thoroughly counsel my clients and their families about the pros and cons of these mortgage programs. As is with every loan product, there always is a cost to borrowing money and we never take a one-size-fits-all approach.
A Reverse mortgage can change someone’s life. End financial stress, retire early, age gracefully, or even buy into a community like this one. Contact me to learn more about the ins and outs of Reverse Mortgages and see if one is right for you or a loved senior in your life.
Lets Get Real! Buying a Brand New Home can seem like the easy option in today’s real estate market. Picking your finishes and having tons of incentives thrown at you by a big builder sounds like quite the treat!
But that’s not what my latest client experienced. He called me last month really anxious because he had lost trust in the nationwide company building his new home. The worst of it was the in-house lender that was supposed to be giving him a great deal in fact wasn’t and clearly were inept at doing their job.
I was able to offer him an interest rate comparable to the builder’s advertised “unbeatable” offer, and more importantly ease my client’s nerves by having someone they trust involved in the process. They are set to close today and move in just in time for the holidays.
Here’s the take-away…even when buying a new home you still need your own real estate and mortgage advocates. Remember, the sales office is employed by the builder, so who do you think they’re looking out for first. I’ll give you a hint…its not you! And these in-house mortgage companies created by the builders are operating as loss leaders to get buyers in the door, which means they are probably not compensating their mortgage consultants very well, which probably means you’re not working with the sharpest knives in the mortgage drawer.
So, if you are thinking of buying a brand new home in the coming year, hit me up before even heading out to their model homes. We’ll discuss what you need to watch out for, and I’ll explain to you why having me involved in the process as either your REALTOR, mortgage broker or both is a huge benefit for you, and how you can have my representation services when buying a new home.
Over the past 15 years, I’ve provided an annual forecast of the mortgage and real estate markets. Generally, I speak to three main characteristics: housing supply, buyer demand, and interest rates.
This year, it’s all about the rates. If 30-yr mortgage rates remain at 7% or higher, housing supply and buyer demand will remain anemic. If they fall below 6%, we will see a flood of both buyers and sellers enter the market. Much of 2023 & 2024 saw rates largely stay within the 6-7% range, which led to generational-low transaction count and record-low affordability levels.
As such, it makes sense to focus my forecast on where interest rates may be heading in 2025.
Who Controls Interest Rates?
Many people are led to believe mortgage rates are controlled by select individuals, such as bank CEOs, The Federal Reserve Board (affectionately known as “The Fed”), or the sitting president (not sure what his affectionate nickname is at the moment). This is not correct!
Mortgage rates are actually controlled by the buyers and sellers of mortgage backed securities. In plainer words, mortgage rates move by investors trading mortgages. There is no man behind the curtain; no key players puppeteering rates, nor a president successfully demanding interest rates “to drop immediately“.
Instead, rates move based on risk & opportunity cost for these free-market investors. Let’s talk briefly about each of these factors.
First off, the biggest risk factor for a mortgage trader is inflation. Inflation eats away at the value of money, so when inflation increases traders don’t want to buy ultra-low rate mortgages. If they buy a mortgage bond with a 3% fixed rate, but inflation is at 4% they are actually losing money.
And opportunity cost is simply a question of can a trader buy an alternative investment with a higher rate of return & lower risk. So, no smart trader would buy a 3% mortgage when there are risk-free money market accounts offering 4% savings rates.
Below are the issues mortgage traders will be focused on in determining how much in mortgages they want to buy and at what interest rates.
Factors in 2025 that will push rates DOWN
Slowing Economy – Many sectors of our global economy have slowed down in recent quarters. Many factors could have contributed to this (political uncertainty, rising cost of goods/services, ), but generally interest rates fall during sluggish economic times. The primary driver of recent Gross Domestic Product (GDP) growth was personal consumption, but I believe personal consumption will slow in 2025 as households are forced to tighten their financial belts. Credit card balances are at record highs and continue to climb (check out my prior post about the alarming levels of household debt).
Lower Inflation – Rising prices on everything took a toll on most of the world in 2022-2023, but things are starting to ease. Inflation rates are now slightly over the historical trend and The Fed’s preferred level of inflation. Don’t expect prices of things to fall, but if they hold at near-constant levels then mortgage rates should decline.
Higher Unemployment – If fewer people are working, it is a sign of a weakening economy. While statistics continue to show 100-200K new jobs being created every month, this could change dramatically in the coming months. The largest employer in the US (the federal government itself) is mandating most employees to return to the office for work and looking to significantly scale back the total number of government employees. This could drastically change the employment picture, and push the unemployment rate up.
Factors in 2025 that will push rates UP
Long-term Tariffs – President Trump is using Executive Orders to impose or threaten tariffs on certain countries and certain products. Tariffs are essentially an added tax on goods that are made in a foreign country. Some people think this added cost will be absorbed by the foreign company who is importing the goods, but this is rarely the case with tariffs. The tariff is typically added to the cost of the item, meaning the end consumer (Americans) will incur these tariff expenses. If tariffs become more of an entrenched part of Trump’s foreign policy rather than a short-term negotiating tactic, it will drive up inflation and interest rates with it.
Smaller Labor Force – Between deportations and baby boomers retiring, the number of available workers could decrease. With fewer workers, employers will need to increase wages to entice people to the workforce. This will fuel the flames of inflation (as it did when we came out of the deepest economic trenches of the pandemic) and push interest rates up higher still.
Growing Government Debt – Our country is in debt more than ever before. Presently, we carry over $30 TRILLION in debt, which is over 120% of our Annual GDP. That percentage is similar to levels seen at the end of World War II. It made sense we were in debt up to our eyeballs after fighting a World War for 4 years, but this is the first time we’ve been at these levels during peacetime! Our government debt is sold to investors via Treasury bonds, and the more we go into debt the more we have to entice them to keep buying our bonds. This enticement is in the form of higher rates of interest earned by the investor (and paid by the borrower). If rates of gov’t bonds increase, then mortgage rates will follow suit as well.
What Will Win The Tug-of-War?
2025 will see these pressures pull against one another, and neither will be a clear-cut winner. I do believe the downward pressures will slightly win out, as some of the upward pressures (tariffs in particular) also tend to slow down an economy, which should lead to lower rates. Overall, if you start hearing the R-word (“recession”) thrown around in 2025, expect 30-year rates to finally dip below 6% by the end of this year.
If mortgage rates do considerably improve, there will be more real estate transactions but not necessarily higher home values. It is expected more homes will come up for sale (both new construction and resale homes), which will keep home values somewhat in check.
If mortgage rates end up increasing above 7%, then we could see home values fall. With affordability already out of reach for so many potential home buyers, worsening conditions will further reduce the already anemic levels of demand currently seen.
Do you have thoughts or insights to share about your local real estate market? Leave them in the comments section below.
Zillow operates as an advertising platform rather than a public information service. Higher search rankings for houses or agents do not imply quality; they reflect the amount spent on advertising. Users should be wary, as top results may simply be influenced by financial investment, much like Google’s advertising model.
Matt Sundermier's Memos on Real Estate & on Life 