We always like to see how well our crystal ball is working, so we took a peek back at our Keynote from late March to see if what we had predicted was going to be moving (or not moving) the markets has held true.  Here is what we predicted would move markets:

• Predicted rate cuts: two .25% rate cuts for 2025 and another two in 2026

• Slower economic growth

• Inflation will remain above the 2% target

Well, for you baseball fans out there, we are batting a thousand!

The consensus is that the Fed will be cutting rates, but with a stronger probability in the September meeting and then a subsequent cut later in the fourth quarter. We saw GDP retreat in Q1 of 2025 by 0.2%, which indicates economic growth is slowing and would tend to be positive for allowing future rate cuts. Inflation reports in May showed a slight increase in inflation of 0.1% with an annualized rate of 2.8%, which is on the higher side of our predictions in March.

What we did not have clarity on was any geopolitical issues or black swan events that could affect markets, and the increased tensions in the Middle East could be the unknown factor in all of this. As we write this today, we do not see the typical flight to quality that has been seen in past conflicts, which would tend to drive interest rates down as money will come out of more risky assets and look for a haven until the conflict subsides. So rates are still in the same range as they were before the escalation of Middle East tensions.

So, what does this all mean to you and your clients? In our opinion, that means rates are not going to drive anyone to or from buying or selling a home. Mortgage rates appear to be less subject to the volatility that we experienced last year, which can drive people to sit on the sidelines and wait. So, taking volatility out of the equation allows people to be free to make the normal life decisions that have always driven homeownership, and by using the FORD process and engaging with your sphere consistently, you can uncover those opportunities and ensure you have a successful remainder of 2025.

But don’t go it alone — and don’t think you have to be an interest rate or economic expert.  Leverage your Key Mortgage loan officer to help provide the needed advice and consultation to your clients. By working together, we create informed and confident homebuyers and sellers and create lifelong relationships.