2025 Market Predictions: Trump’s Impact on Rates & Inflation

President Trump wanted to lower interest rates, and in many markets across America the housing market had just entered what we call a neutral market for the first time in years. I recorded this in February 2025, and it covers rates and the market heading into spring.

On rates. In late January, the president demanded lower interest rates at Davos. He does not have the direct power to control them, and the only thing he can really do is put pressure on Fed chair Jerome Powell. Powell basically said he would do what is best for the nation. The Fed's control is the federal funds rate, which it lowered several times in 2024. One thing I always want people to know is that the Fed rate does not directly correlate with mortgage rates. Several times last year clients called me to say they had heard rates went down after the Fed cut, and mortgage rates had actually gone up. At its late January meeting the Fed decided not to lower rates, and a lot of people did not think we would see another cut all year because inflation was still pretty hot.

If you want to follow mortgage rates, the best thing to look at is the 10-year Treasury. You can search for it, and depending on the day the correlation is usually spot on. Lenders look at it when advising clients whether to lock or wait. The number one thing that will bring mortgage rates down is inflation coming down, and whether you voted for the president or not, that is what everyone hopes happens sooner rather than later. It is too early to project how any policy will affect rates.

The housing market is the more interesting subject. Traditionally spring is when most buyers and sellers enter. On Redfin's reports, days on market in most markets had been going up. During the busiest times it could be 10 or 15 days. In a lot of markets it was up to 100 days, so if you list your property, it could take two to three months to get under contract. Many call that a neutral market. A seller's market has fewer homes and more demand. A buyer's market is the opposite. A neutral market is in between, where if you put a home on the market it sells, and as a buyer you can actually preview properties and in many cases get an offer accepted below asking, sometimes with the seller paying closing costs. Listings were up in most markets, about 15% where I live and up to 50% in some Florida markets. If that trend continues, I think it could be one of the best buyer opportunities in years. You may not see rates come down, but if you get the property cheaper you can refinance later.

One challenge we saw in our office was buyers who had to sell a home before they could buy. Some builders will not even consider an offer contingent on selling a home. So one of the more unique tools I saw was a program we call buy before you sell. It is a short-term bridge loan on your current home, and the version we were using did not require a monthly payment for up to a year. Terms depend on the program and your file. You use your equity today as the down payment and close on the next home, you are not rushed to sell, and you can write your offer without a sale contingency. If you are in that situation, ask me about it.

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