Fed’s New Players: Will They Crash or Calm Mortgage Rates?
What the Fed’s shake up means for you.
Join me in our ‘Weekly Market Update’ to decipher what to expect in the coming weeks & months.
Happy Thursday! Brian Manning here with the weekly update. Let’s get right to it!
I’m super excited to get back to doing these. I know we sent out a handful of emails in December that were text only. We got a lot of messages wondering if we were going to come back and do video updates. We are. We’re here. We’re live. We’re excited. 2025, here we go.
But, before I get started and before I get too excited, I do want to say that our hearts go out to everybody who’s being impacted right now by these fires in California. It’s just devastating to see this. Unfortunately, we’ve gone through this ourselves here with Louisville, Erie, Superior, and the impacts we’ve had with fires. We just know the devastation all too well. And it’s just heartbreaking to see families that are just being distressed by this. Our hearts go out to everyone and we hope that there are brighter days ahead of you. I will say, this makes me think about one thing: pay attention to your home insurance. I talk to a lot of borrowers and they’re only focused on what’s their annual premium. But, I can tell you, your annual insurance premiums don’t matter if you lose your house in total devastation. So, please pay attention to your homeowners insurance and your premiums. But most importantly, our hearts go out to everybody in California.
Let’s get started.
So, on Monday this week, we had a changeover in the Federal Reserve. What do I mean by that? So, the Federal Reserve has Fed voting members. Not all Federal Reserve members vote. Every year we have four leave and four new members come in. The four that we got rid of were called “hawks”. This means they were all voting Fed members who were in favor of hiking interest rates. Of the four we replaced them with, one is a dove. That means they are in favor of Fed rates moving lower. The other three new are hawks as well.
So, we got rid of four hawks. But, we still have three. It is what it is. We’ll have to wait and see what happens there.
Tuesday, we got some feedback from CoreLogic. CoreLogic is one of the best places to look for feedback and predictions on home appreciation. In 2025, their prediction originally was going to be 2.4% home appreciation across the country. Well, they upped that, which is exciting to see. Now they’re at 3.8%. It’s great to see CoreLogic upping their anticipation of home appreciation across the country.
Wednesday this week, we got ADP. ADP is the largest provider of private payrolls in the U.S. There was an expectation of 140,000 jobs to be created in the month of December. Instead, we got 122,000 jobs created which is softer than expected.
We have another report coming out tomorrow. That’s the BLS (Bureau of Labor Statistics) report. On the first Friday of every month, we get this report from the government. This is going to be very important for us to watch out for. Anticipation of tomorrow’s report, and something to make very close note of, is 160,000 jobs created in December and unemployment to remain at 4.2%. So, if tomorrow’s report is strong, if unemployment moves lower than 4.2% or jobs are higher than 160,000, unfortunately, that’s likely not going to go great for mortgage rates. But if it’s a report that’s not as good, maybe unemployment moves up, maybe the jobs report for December is not as good as expected, that could go well for mortgage rates. So, very important. Keep an eye on that, and we’ll talk more about that next week.
Wednesday of this week, we got the Fed minutes from their December 17th and 18th meeting. These minutes contain the notes of what was discussed at this meeting. We really look at these to figure out what is the mindset of the Federal Reserve right now. The biggest takeaway is that there’s a lot of uncertainty in the Federal Reserve right now, primarily revolving around the Trump administration. You can tell that they just kind of want to pause and wait and see what happens. They are concerned about the unknown impacts of their immigration policy and their tariff policy. Both of those could have an impact on inflation.
We all know, because we’ve talked about this so many times in the past, that the Federal Reserve has two mandates.
One is price stability in the United States. That’s controlling inflation. Number two is gainful employment. If you have tariffs, that could be potentially inflationary. If you have immigration adjustments, that could be inflationary as well. So, the Federal Reserve’s tone in this meeting was a lot of uncertainty, a lot of feeling of let’s pause, let’s wait, and let’s see what happens.
I would not expect the Federal Reserve to do anything in January as far as rate cuts are concerned. We’re going to have to wait and see what happens. It feels like they want to get farther into the year to see what’s going on in the U.S.
Today is a quiet news day. Not a lot to talk about there. Markets are closed early. Stock markets are closed today. Bond markets closed early today in observance of Jimmy Carter. One thing I do want to note, Jimmy Carter was huge on Habitat for Humanity. If you ever look at what he’s done over the years, Jimmy Carter was phenomenal. I definitely agree with markets closing today in his honor.
I’m around. If you have any questions, let me know.
Realtors, we are super excited. We have a new presentation coming out. It’s called Winning the Listing Presentation. Brand new, new content. First one is next week, Thursday, the 16th at BlackBelly. I have classes coming up in Boulder, Colorado Springs, Denver, Fort Collins. I’m stoked to get this content out there. It’s going to be amazing. We’re going to have a great time. Make sure you RSVP. There’s limited space at all these venues. We would love to see you there.
Hope you have a great day!
Talk to you soon.
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