Mortgage rates are better this month

Down 0.25% from 4 weeks ago.

February 28th, 2025

Conventional

6.750%

Rates were

~7.000%

end of January

FHA/USDA

6.125%

Rates were

~6.375%

end of January

VA

6.125%

Rates were

~6.375%

end of January

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What’s Happening?

Rates are dropping! But not really due to the points below. To be honest, I’m not sure the specific reason rates have dropped. Rates rose for a bit in early February but there is some market weakness that’s driving rates down.

•Markets are dropping (stocks & Bitcoin) (good for rates): It’s unclear why but the S&P500 is down 1.5% in the last month and Bitcoin is down 17%. When markets drop, we see a “flight to safety” which usually means bonds (including mortgage back securities). This recent drop is likely a sizeable contributor to the recent rate drops in the last 2 weeks of February.

•Jobs Report (neutral for rates): The BLS January Labor Report released February 7th was mixed with good/bad data and ultimately didn’t affect rates much. This newest jobs report supports that the labor market is still strong and annual wages are up over $1.40/hr Y-O-Y (up about 4.0%) which will not incentivize the Fed to cut rates sooner than their current plan in June.

New jobs came in at 143k, 169k new jobs were expected. (weak jobs data; pushes rates down)
Unemployment YOY dropped from 4.1% to 4.0%. (slightly strong labor data; pushes rates up slightly)
Average hourly earnings rose from December by 0.5% (+$0.17/hr), now averaging $35.87/hr, which can contribute to inflation.(inflation indicator; pushes rates up)
Average hours worked per week decreased by 0.1 hours compared to Jan 2024 (deflation indicator; pushes rates down)

•Inflation Reports (bad for rates): The news this week was the inflation data we got with the CPI (consumer price index) numbers. Inflation was slightly above projections, YOY being +3.0% instead of the expected 2.9%. Not much of a difference, but it did push rates up a bit on Wednesday when this report came out, however, rates recovered and improved yesterday and today with the weaker-than-expected retail sales data released today.

My Predictions

The mortgage rate trend seems to have reversed and I like it! The real estate market has seemed to pick up once the conventional rate falls below 7% and we’re officially there again which should help buyers and sellers afford to move.

The technical data does suggest that rates will likely hold pretty close to where they for the next few weeks. But I won’t be surprised if we see rates fall a little bit more.