We typically slow down around this time, outside of the clients who went under contract late Nov or Early Dec that are trying to close before Christmas. My slowest month is always January.

The real estate market isn't as hot as it was in 2022, but it is still active, and we generally have more overall inventory. Every market will be a little different, but I am in East Texas and inventory is available, but I see house prices higher. The frenzy from the lower rates in 2022 is gone, overall, it's more of a "balanced" market. Not a buyers' market, but not a sellers' market either. I'd say in our area its leaning more towards a buyer's market, because houses are sitting longer on the market and the inventory is available. I am seeing more sellers assist at this time, which is helping close more deals, but still not the same chaos from 2022. I am doing a lot of down payment assistance programs from the state as a lot of my clients are strapped for available cash to close.

Rates are trickling down, but I still think it is a little early to refinance for a lot of buyers who purchase in the last year. If you are in the 7s, a refinance might be worth looking into, but every situation will be different to see what the return on investment is. I am hoping first quarter of 2026 we will likely see rates decrease even more.

There is talk that the Feds will lower rates again soon, but keep in mind the Fed controls short term rates, not mortgage rates (credit cards, auto loans, personal loans, HELOCs, etc.). Mortgage rates are long term rates, and they based on long term bonds, especially the 10-year treasury. Investors want a return higher than the treasuries, so mortgage rates typically run 1.5% to 2% above the 10-year yield. If the 10-year yield falls, mortgage rates usually fall. If it rises, then mortgage rates usually rise. Watch the 10-year vs the Fed rates and you can see how the market direction is going.

I have been a mortgage lender for a little over 5 years after I retired from the military and 2025 has been my biggest producing year. Every loan officer will be different and there are different reasons for that growth, but the majority of my business is either repeat or referral business. I felt like most people accepted that rates are what they are and decided to buy the house and refinance later. I think that is a smart move.

Hope that helps some.

Diggity said:

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Well it is December

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My timeline is this whole year, not just now.

We kept hearing about influx of buyers and refinances with rate cuts, yet here we are. Elevated and possibly growing inventory, sellers sidelining their home instead of pricing at market, and buyers waiting for a miracle. I even warned people on past rate related threads not to get too excited about FED rate cuta, as refinances likely won't trigger in mass unless the 10-yr or 30-yr yield gets firmly under 5% and closer to 4%. And as the gentleman above mentioned, FED FUNDS rate has very little bearing on long-yields which are very unlikely to come significantly lower.

But while I have my opinions I feel strongly about, I was looking to see what the boots on the ground are seeing over the past months. Post above seems to indicate a mostly healthy market.. but if buyers aren't stepping up and inventory is higher, that screams to me prices are too high, not rates too high. The bid and the ask are wide apart, and the ask is mostly refusing to budge. If that weren't the case, we'd be seeing more sales volume.

One thing I would also point out is that rates may not drop as much as expected.

The reason being is yes, the 10YR UST may drop - but there is also bond investor expectations with those who ultimately buy the Mortgage Backed Securities that there will be an impending wave of refinances when rates become favorable.

So they will price the spread over the 10YR UST higher in order to account for shorter hold times with these loans and thus will look to put a higher spread in order to capture similar returns as they would have gotten when people were expected to stay to in the loans for a longer time.

Basically what I am trying to say is that just cause rates drop - bond investors know that the expected hold times for those loans may not be as long as seen historically as the expectations for rates to keep dropping. So they will price a higher amount to account for the shorter hold period because ultimately there will be people who refinance at 6% and then 5% and then 4%.

Agreed Luke. Only thing that might change is if the FED attempts to perform some type of QE, whether controlled over a long period, or emergency. They recently completed their QT and liquidity cracks are starting to emerge. But ultimately, the risk of holding American long-term paper that has returned negative real yields against the currency debasement will likely keep bond investors seeking elevated returns. I don't know if we've seen a floor, but I definitely don't think we've seen a ceiling.

Fair enough. You didn't specify that originally.

Rates haven't dropped enough to get people off the sidelines in my area. There are isolated pockets that are doing well but the market is slow in general.

Go to the Facebook page for HAR agents and nearly every post is someone's asking how to get their listing to move.

Spot on

We have seen rate improvements the past week.

I'm happy to run a quote for anyone looking to refi or purchase.

Email is user name.

My experience the last two years is people are buying based on need, not wants. So you get a new job and relocate, marry, divorce, have new kid/s or family issues.

But if you just want a pool, or more space, when I quote the new housing cost folks fall back in love with the house they have. End of conversation.

Multiple threads have speculated that rates need to get down in the 5's to unleash pent up demand. I agree with that. 5.5 puts FHA/VA in the high 4s.

bpany@hurstlending.com said:

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We have seen rate improvements the past week.

I'm happy to run a quote for anyone looking to refi or purchase.

Email is user name.

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Is it because of movement in the actual rate, or spread tightening?

SteveBott said:

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My experience the last two years is people are buying based on need, not wants. So you get a new job and relocate, marry, divorce, have new kid/s or family issues.

But if you just want a pool, or more space, when I quote the new housing cost folks fall back in love with the house they have. End of conversation.

Multiple threads have speculated that rates need to get down in the 5's to unleash pent up demand. I agree with that. 5.5 puts FHA/VA in the high 4s.

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Thanks Bott

Diggity said:

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Fair enough. You didn't specify that originally.

Rates haven't dropped enough to get people off the sidelines in my area. There are isolated pockets that are doing well but the market is slow in general.

Go to the Facebook page for HAR agents and nearly every post is someone's asking how to get their listing to move.

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100% agree. And exactly what I'm seeing. Sellers aren't budging, and buyers can't afford unless they have no choice. It still seems the majority of the transactions outside of those in need is boomers with money buying from boomer with money. And not just buying anything. Minimal deferred maintenance, quality homes.

I keep coming back to the spread between price of new build starters and existing similar SF homes. It almost never ends where new builds rocket up in price after having to discount so heavily merely to show product moving on the balance sheet.

I'm going on 2 years retired so feel free to ignore this. When things are slow and tough is the best time (in my opinion) to take away the competition's business. People wringing their hands and talking to their colleagues about how tough it is are ripe to have their lunch money taken. Even when it's slow business is being done by someone. I figured it needed to be me. 2007, 08, 09 were the best years of my career.

It's easy to lick your wounds and not stay on top of your referral base, your leads, prospects who went with someone else last transaction, network connections, etc. Almost everyone knows someone that's in a must move, wants to move, is thinking about moving, wants to build a pool, needs to remodel, is getting married, divorced, or some other life event that might trigger a new mortgage transaction. Someone is grinding and calling on those people. It just as well be you.

Those type of markets aren't typical. B/CS is in its own little world. Same for some pockets in the metros. Most of those pockets are close to the central city.

The Heights in Houston was a slum/low rent area when I was growing up in the 70's.

MS08 said:

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Following. Interesting & insightful banter.
We had a terrific year moving 43 student townhome units.
Having product in a niche market helps.

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That's great. Student housing has been resilient.

Red Pear Luke said:

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One thing I would also point out is that rates may not drop as much as expected.

The reason being is yes, the 10YR UST may drop - but there is also bond investor expectations with those who ultimately buy the Mortgage Backed Securities that there will be an impending wave of refinances when rates become favorable.

So they will price the spread over the 10YR UST higher in order to account for shorter hold times with these loans and thus will look to put a higher spread in order to capture similar returns as they would have gotten when people were expected to stay to in the loans for a longer time.

Basically what I am trying to say is that just cause rates drop - bond investors know that the expected hold times for those loans may not be as long as seen historically as the expectations for rates to keep dropping. So they will price a higher amount to account for the shorter hold period because ultimately there will be people who refinance at 6% and then 5% and then 4%.

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Good information but refinancing, every time there is a 1%, rate reduction makes very little sense.

I don't recommend refis based on rate drops.

I use cost divided by saving. So if you can save enough each month to break even in 12-15 months I say do it. A longer break even I want to discuss how confident the client is of staying in the home long enough to make it worth.

5000 cost and 400 per month savings is a go. Savings of 200 then I would recommend waiting for better rates.