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You are here: Home / Mortgage Rates / Mortgage Rates, Inflation, and a Whole Lot of Uncertainty

Mortgage Rates, Inflation, and a Whole Lot of Uncertainty

May 15, 2025 by Ron Henderson

30 yr Fixed Mortgage Rates 04092021-05132025
Chick to enlarge

Mortgage rates have been on a wild ride the past few years, and we’re still not back to anything close to “normal.” As of mid May, the 30-year fixed rate is hovering around 6.92%. That’s down from the peaks in late 2023, but still double what we saw back in 2021.

So where are things headed? It’s complicated and not just because of inflation.

Inflation’s Slowing But It’s Not All Clear Yet

The latest inflation numbers (April 2025) show signs of cooling. Inflation is critical as bond investors need to make sure they get an actual return taking into account risk, and losing value because of inflation is critical. The Consumer Price Index (CPI) came in at:

CPI Core Rates April 2025
Click to enlarge
  • 2.3% year over year for headline inflation
  • 2.8% year over year for core inflation

Even more encouraging are the short-term “run rates”:

  • Core 3 month average dropped to 2.1% from 2.9%
  • Headline 3 month average fell to 1.5% from 2.5%

These are the kinds of numbers the Fed wants to see before making any real move on rate cuts. But that doesn’t mean they’ll move quickly.

The Fed Isn’t Operating in a Vacuum

We’ve got a few wild cards in play. Talk of tariffs on and off adds uncertainty to the international investment community. Add that to the ongoing dysfunction in Washington and the reality that the U.S. is now carrying over $36 trillion in debt, with $9.2 trillion needing to be refinanced this year at today’s rates.

That kind of debt load puts pressure on interest rates and makes the Fed’s job even harder. The bond market knows it. Lenders know it. And so should buyers.

What This Means If You’re in the Market

If you’re waiting for rates to drop, one wrong move politically or a surprise economic report could send things the other way.

If you’re a homeowner looking to refinance or tap equity, the Fed is staying put till they have a grasp on the tariff and employment scenario. Historically, rates are fine. Waiting for the “perfect” time usually backfires.

And if you’re thinking about buying, remember that while rates are high, competition is still there, but even worse when rates drop. Sometimes locking in a decent rate today is better than getting priced out tomorrow.

Inflation is cooling, but politics, debt, and trade noise are clouding the outlook. Don’t wait for clarity in a market that’s never clear. Make moves based on where things are, not where we hope they’ll be.

If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free to contact me

Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – Southland Regional Association of Realtors (2025)
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth

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Filed Under: Mortgage Rates Tagged With: economics, housing affordability, mortgage rates

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