{"id":23766,"date":"2025-12-11T20:20:37","date_gmt":"2025-12-11T20:20:37","guid":{"rendered":"https:\/\/finderica.com\/?p=23766"},"modified":"2025-12-11T20:20:37","modified_gmt":"2025-12-11T20:20:37","slug":"a-path-to-5-mortgage-rates-opens-up-again","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=23766","title":{"rendered":"A Path to 5% Mortgage Rates Opens Up Again"},"content":{"rendered":"
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It\u2019s been a weird few weeks for mortgage rates.<\/p>\n

The 30-year fixed rose about a quarter-percent going into the Fed\u2019s latest cut, driven by hawkish sentiment.<\/p>\n

In short, that we were getting close to the Fed\u2019s terminal rate (as low as they go) and that future cuts might not materialize.<\/p>\n

Then we got the Jerome Powell press conference yesterday and the unveiling of a new short-term bond buying program.<\/p>\n

And importantly, an admission from Powell that we might be overstating employment numbers. The takeaway? More weak labor prints could equal 5% mortgage rates.<\/p>\n

Labor Data Continues to Drive Mortgage Rates<\/h2>\n

Yesterday, Fed chair Powell said<\/a> we could be \u201cdrastically overstating jobs numbers,\u201d with possible job losses of 20,000 per month.<\/p>\n

That would counter any sort of good news on jobs data, for which there hasn\u2019t been much lately.<\/p>\n

Remember, we already saw a couple negative months lately thanks to some revisions in the data.<\/p>\n

And even without negative numbers, the monthly tallies have been the lowest in years.<\/p>\n

Long story short, we aren\u2019t creating a lot of new jobs, and it could be even worse than it looks.<\/p>\n

At the same time, Powell blamed a lot of goods inflation on the tariffs, so that piece of equation is also perhaps less of a concern.<\/p>\n

The Fed also announced<\/a> that it was starting \u201creserve management bond buying\u201d on December 12th following the end of QT.<\/p>\n

Taken together, if inflation continues to improve and labor continues to get worse, you can start to see a path to 5% mortgage rates.<\/p>\n

We\u2019re already mostly there as it stands, and if you speak to your local mortgage broker or loan officer, they\u2019ll tell you they\u2019re already quoting rates in the 5s.<\/p>\n

I predicted a 30-year fixed of 5.875% by the fourth quarter in my 2025 mortgage rate predictions post a year ago.<\/p>\n

Doesn\u2019t look like we\u2019ll get there this month, though you can\u2019t rule anything out. We are only about a quarter above the 5s as it stands today.<\/p>\n

5% Mortgage Rates by the First Quarter of 2026?<\/h2>\n

I haven\u2019t given up completely on my pursuit for 5% mortgage rates by the end of 2025, but time is running out. And I need to be realistic.<\/p>\n

But I do see it being a matter of when, not if. And it\u2019s looking more and more likely as the labor market continues to deliver bad news.<\/p>\n

The next big report is the delayed November jobs report, slated to be released next Tuesday. Keep a close eye on that one!<\/p>\n

Of course, I don\u2019t love that labor is showing signs of cracking because that hurts consumer confidence and can also hurt home sales and the housing market.<\/p>\n

It can also lead to falling home prices, in spite of the lower mortgage rates that may come with them.<\/p>\n

Ultimately, we aren\u2019t far from what I\u2019d consider a pretty decent mortgage rate, something in the mid-5s.<\/p>\n

Any lower than that and it might signal bigger problems in the wider economy. We kind of don\u2019t want 4% mortgage rates to return, as good as they sound.<\/p>\n

A sweet spot might be something just a little bit lower where recent home buyers can shed their 7-8% mortgage rates and snag something that starts with 5 via a rate and term refinance.<\/p>\n

And prospective home buyers who ideally still have steady employment can pursue a home purchase with a reasonable mortgage rate.<\/p>\n

If they can do so while also getting a decent price on the property, it\u2019s a win-win.<\/p>\n

Lower Mortgage Rates and Lower Home Prices?<\/h2>\n

I\u2019ve long said mortgage rates and home prices can fall in tandem, just as they rose in tandem for several years once rates skyrocketed in mid-2022.<\/p>\n

Remember, home prices kept rising, at least nationally, as mortgage rates ascended from record lows below 3% to as high as 8%.<\/p>\n

Flat or even lower home prices would help ease the affordability issues we\u2019ve been experiencing and boost home sales.<\/p>\n

By the way, mortgage rates are historically lowest in the month of February, so it wouldn\u2019t shock me to get there around that time.<\/p>\n

Just be mindful that mortgage rates tend to exhibit a wide range in any given year, so they can also head higher at times as well.<\/p>\n

That\u2019s kind of what we saw this past month where they got down to around 6.125% before bouncing higher on resistance.<\/p>\n

As always, look for opportunities but don\u2019t be surprised if they reverse course at times as well.<\/p>\n

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\"Colin<\/div>\n
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Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.<\/p>\n<\/div>\n<\/section>\n

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\"Colin<\/div>\n
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