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Here’s what to expect on mortgage rates into early 2025

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Mortgage rates seem to have steadied. That may be a good sign for the market, experts say.

The average 30-year fixed rate mortgage in the U.S. slightly dipped to 6.78% for the week ending Nov. 14, barely changed from 6.79% a week prior, according to Freddie Mac data via the Federal Reserve.

“Even though it’s higher than it has been over the course of several weeks, it’s probably good news for homebuyers,” said Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors. 

“When rates are moving around a lot, it makes a lot of uncertainty in the market,” Lautz said. 

Mortgage rates declined this fall in anticipation of the first interest rate cut since March 2020. But then borrowing costs jumped again this month as the bond market reacted to Donald Trump’s election win.

While the president-elect has talked about bringing mortgage rates down, presidents do not control borrowing costs for home loans, experts say.

Instead, mortgage rates closely track Treasury yields and are partially affected by what happens with the federal funds rate.

“They foresee inflationary policies, whether it’s tariffs or greater government spending, the tax bill … they’re pricing in more inflation,” said James Tobin, president and CEO of the National Association of Home Builders. “As the bond market reacts, mortgage rates are going to react to that, too.”

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Less volatility can be a good sign, said Chen Zhao, Chief economist at Redfin, an online real estate brokerage.

“High volatility by itself actually pushes mortgage rates even higher above treasury yields,” Zhao said. “More stable rates also means that homebuyers don’t have to worry during their home search about what their budget allows for changing.”

Trump’s team did not respond to a request for comment.

Don’t expect ‘huge swings’ on mortgage rates

Election uncertainty contributed to an upward swing in mortgage rates during October. Then rates went up even more last week as the stock market and yields reacted to the election results.

The 10-year Treasury yield jumped 15 basis points on Nov. 6, closing to trade at 4.43%, hitting its highest level since July, as investors bet a Trump presidency would increase economic growth, along with fiscal spending. The yield on the 2-year Treasury was up by 0.073 basis point to 4.276% that day, reaching its highest level since July 31.

But now that we have a president-elect, mortgage rates are expected to gradually come down over time, Lautz said.

From a monetary policy standpoint, future rate cuts are up in the air. Federal Reserve Chairman Jerome Powell said on Thursday that strong U.S. economic growth will allow policymakers to take their time in deciding how far and how fast to lower interest rates.

If the Fed continues to ease the federal funds rate, it could provide indirect downward pressure on mortgage rates, according to NAHB chief economist Robert Dietz.

“However, improved growth expectations would lead to higher rates, as would larger government deficits,” he said.

Experts say that mortgage rates might head into a “bumpy” or “volatile” path over the next year.

“I don’t think that there’s going to be any huge swings down into the 5% range,” Lautz said. “Our expectation is that rates are going to be in the 6% range as we move into 2025,” she said.

How buyers, sellers and homeowners can benefit

Rates that are trending lower can present an opportunity for buyers who have been house hunting for a while, especially as the winter season kicks in. Competition tends to slow down in the winter months in part because homebuyers with kids are in the middle of the school year and reluctant to move, Lautz explained. 

Our expectation is that rates are going to be in the 6% range as we move into 2025.

Jessica Lautz

Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors

Current homeowners can also make the most of lower rates.

For example, if you bought your home around this time last year, when mortgage rates peaked at around 8%, you might benefit from a mortgage refinance, Lautz said. 

It “makes sense” to consider a refinance if rates have fallen one to two points since you took out the loan, Jeff Ostrowski, a housing expert at Bankrate.com, told CNBC after the Fed’s first rate cut this fall.

Remember that a loan refinance isn’t free; you may incur associated costs like closing costs, an appraisal and title insurance. While the total cost will depend on your area, a refi is going to cost between 2% and 6% of the loan amount, Jacob Channel, an economist at LendingTree, said at that time.

If you’re pondering on whether to refi or not, look at what’s going on with rates, reach out to lenders and see if refinancing makes sense for you, experts say.

Homeowners have earned record home equity. U.S. homeowners with mortgages have a net homeowner equity of over $17.6 trillion in the second quarter of 2024, according to CoreLogic. Home equity increased in the second quarter of this year by $1.3 trillion, an 8.0% growth from a year prior.

If you’re looking to sell your current home, you may be able to counteract slightly high borrowing costs on your next property by placing a larger down payment, Lautz said.

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Trump plan to freeze funding stymies Biden-era energy rebates for consumers

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Some states have stopped disbursing funds to consumers via Biden-era rebate programs tied to home energy efficiency, due to a Trump administration freeze on federal funding enacted in January.

The Inflation Reduction Act, passed in 2022, had earmarked $8.8 billion of federal funds for consumers through two home energy rebate programs, to be administered by states, territories and the District of Columbia.

Arizona, Colorado, Georgia and Rhode Island — which are in various phases of rollout — have paused or delayed their fledgling programs, citing Trump administration policy.

The White House on Jan. 27 put a freeze on the disbursement of federal funds that conflict with President Trump’s agenda — including initiatives related to green energy and climate change — as a reason for halting the disbursement of rebate funds to consumers.

That fate of that freeze is still up in the air. A federal judge issued an order Tuesday that continued to block the policy, for example. However, it appears agencies had been withholding funding in some cases in defiance of earlier court rulings, according to ProPublica reporting.

In any event, the freeze — or the threat of it — appears to be impacting state rebate programs.

“Coloradans who would receive the Home Energy Rebate savings are still locked out by the Trump administration in the dead of winter,” Ari Rosenblum, a spokesperson for the Colorado Energy Office, said in an e-mailed statement.

The U.S. Department of Energy and the White House didn’t return a request for comment from CNBC on the funding freeze.

In some states, rebates are ‘currently unavailable’

Consumers are eligible for up to $8,000 of Home Efficiency Rebates and up to $14,000 of Home Electrification and Appliance Rebates, per federal law.

The rebates defray the cost of retrofitting homes and upgrading appliances to be more energy efficient. Such tweaks aim to cut consumers’ utility bills while also reducing planet-warming carbon emissions.

California, the District of Columbia, Maine, Michigan, New Mexico, New York, North Carolina and Wisconsin had also launched phases of their rebate programs in recent months, according to data on an archived federal website.

All states and territories (except for South Dakota) had applied for the federal rebate funding and the U.S. Department of Energy had approved funding for each of them.

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The Arizona Governor’s Office of Resiliency said its Home Energy Rebates programs would be paused until federal funds are freed up.

“Due to the current federal Executive Orders, memorandums from the White House Office of Management and Budget, and communications from the U.S. Department of Energy, funding for all Efficiency Arizona programs is currently unavailable,” it said in an announcement Friday.

Rhode Island paused new applications as of Jan. 27 due to “current uncertainty” with Inflation Reduction Act funding and executive orders, according to its Office of Energy Resources.

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The Georgia Environmental Finance Authority launched a pilot program for the rebates in fall 2024. That program is ongoing, a spokesperson confirmed Monday.

However, the timeline for a full program launch initially planned for 2025 “is delayed until we receive more information from the U.S. Department of Energy,” the Georgia spokesperson explained in an e-mail.

However, not all states have pressed the pause button: It appears Maine is still moving forward, for example.

“The program remains open to those who are eligible,” Afton Vigue, a spokesperson for the Maine Governor’s Energy Office, said in an e-mail.

The status of rebates in the eight other states and districts to have launched their programs is unclear. Their respective energy departments or governor’s offices didn’t return requests for comment.

‘Signs of an interest’

While the Trump administration on Jan. 29 rescinded its memo ordering a freeze on federal grants and loans — two days after its initial release — the White House said the freeze nonetheless remained in full force.

Democratic attorneys general in 22 states and the District of Columbia filed a lawsuit against the Trump administration, claiming the freeze is unlawful. The White House has claimed it is necessary to ensure spending aligns with Trump’s presidential agenda.

David Terry, president of the National Association of State Energy Officials, said he is optimistic the rebate funding will be released to states soon.

“For these two particular programs, I do not think [the freeze] will stymie the programs,” Terry said. “I see signs of an interest in moving them forward and working with the states to implement them.”

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Social Security Fairness Act benefit increases to arrive this spring

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Lump sum payments to begin arriving in February

In a new update released on Tuesday, the SSA said it will begin issuing retroactive payments in February. Most people will receive the one-time payment by the end of March, according to the agency.

The SSA plans to process the increase to monthly benefits starting in April.

The new timeline “supports President Trump’s priority to implement the Social Security Fairness Act as quickly as possible,” Social Security acting commissioner Lee Dudek said in a statement.

“The agency’s original estimate of taking a year or more now will only apply to complex cases that cannot be processed by automation,” Dudek said. “The American people deserve to get their due benefits as quickly as possible.”

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Among those affected include some teachers, firefighters and police officers in certain states; federal employees who are covered by the Civil Service Retirement System and people who worked under foreign social security systems, according to the Social Security Administration.

What affected beneficiaries should know

Retroactive payments, which most people should receive by the end of March, will be deposited directly into bank accounts on file with the Social Security Administration.

All affected beneficiaries should receive a notice by mail from the Social Security Administration with details about their retroactive payment and new benefit amount. Those notices should come two to three weeks after the retroactive payments, according to the agency.

If your direct deposit information or current mailing address are up to date with the agency, no action is needed, according to the agency. If you want to double check the information the agency has on file, you may sign into your personal online account or call the agency.

If you want to ask about the status of your retroactive payment, the Social Security Administration urges you to hold off until April.

Beneficiaries should also wait until after they have received their April monthly check before contacting the agency to ask about their new benefit amount.

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The average IRS tax refund is 32.4% lower this season. Here’s why

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The average tax refund is 10.4% lower than last year according to the latest Internal Revenue Service data, and inflation is taking more of those dollars.

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The average tax refund this year is down 32.4% compared to last year, according to early filing data from the IRS. 

Tax season opened on Jan. 27, and the average refund amount was $2,169 as of Feb. 14, down from $3,207 about one year prior, the IRS reported on Friday. That figure reflects current-year refunds only.

However, the Feb. 14 filing data doesn’t include refunds receiving the earned income tax credit or additional child tax credit, which aren’t issued before mid-February, the IRS noted. The previous year’s filing data included tax returns claiming these credits. The value of these tax breaks can be substantial, even resulting in five-figure refunds, in some cases.

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Typically, you can expect a refund when you overpay taxes throughout the year via paycheck withholdings or quarterly estimated payments. By comparison, there’s generally a tax bill when you haven’t paid enough.

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‘Don’t call the IRS’ for refund updates

The latest filing statistics come amid mass layoffs for the agency as Elon Musk’s so-called Department of Government Efficiency, or DOGE, continues to cull the federal workforce

It’s unclear exactly how the staffing reduction could impact future taxpayer service. But experts recommend double-checking returns for accuracy to avoid extra touch points with the agency.

“Don’t call the IRS looking for your refund,” said Tom O’Saben, an enrolled agent and director of tax content and government relations at the National Association of Tax Professionals. 

You can check the status of your refund via the agency’s “Where’s My Refund?” tool or the IRS2Go app, which is “available 24 hours a day,” O’Saben said.

Typically, the agency issues refunds within 21 days of a return’s receipt. But some returns require “additional review,” which can extend the timeline, according to the IRS.

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