Real Estate Investors Need to Know/Market Update About Interest Rates and the Housing Market in 2025

Published May 19, 2025 by John Pastre

The real estate landscape is shifting, and savvy investors know that understanding the macro economy is key to navigating the market. This week, industry leader and insider Kevin Peranio, my old boss, Chief Lending Officer at PRMG, shared a powerful video on LinkedIn dissecting the forces shaping financial markets—and his message couldn’t be more relevant to real estate investors.

Here’s what you need to know.

1. The Bond Market is Driving Rates—Not the Fed Alone

While investors often focus on the Federal Reserve for interest rate direction, Kevin reminds us of the real force behind rate shifts:

“The bond market is what matters. It's bigger than any presidency or policy.”

For real estate investors, this means your financing costs are largely tied to market perception of risk, inflation, and national debt—not just Federal Reserve meetings. Watching 10-year Treasury yields and bond market trends is essential to forecast mortgage rate movement.

2. We’re in a Debt-Crushed Economy

“We’re broke. We are a debtor nation on an unsustainable path.”

Government spending, rising interest obligations, and debt ceiling concerns aren’t abstract political issues—they’re economic fundamentals that pressure mortgage rates upward.

As a real estate investor, this has two implications:

• Short-term rate spikes are possible as markets digest new debt issuance.

• Long-term inflationary trends could increase the value of real assets—but also your cost of capital.

3. There’s Still Activity—You Just Have to Know Where to Look

Despite uncertainty, “the flow of money never quits.” There are still buyers, sellers, and lenders in motion. In fact, volatility creates opportunity—especially for investors who:

• Use seller financing or private mortgages to bypass rate volatility.

• Leverage creative financing (like DSCR loans) while property prices are adjusting.

• Focus on cash flow over appreciation during uncertain years.

4. Market Backstops Still Exist—But They’re Fading

Peranio talks about the fading “Fed Put” and “Trump Put”—policy-driven safety nets that reassured markets during crises. These tools once suppressed interest rates and boosted liquidity. Today?

“Markets are more exposed now. Policy safety nets are weaker.”

Investors should prepare for a more market-driven reality, where policy won’t save bad bets. Underwriting conservatively and locking rates quickly when deals pencil out will separate winners from losers.

5. Strategic Takeaway: Position Yourself for Dual-Speed Markets' Dynamics

The borrowing climate, shaped by drastic ebb and flow at each debt auction and every published inflation analysis, will see the cost of capital venture through periods of volatility bottoming out at current rates, ~6.5%. The investors who are well-equipped with the latest information, who utilize models reflecting current interest rates with precision, and demonstrate adaptability in their approach, are those who will not just survive but indeed flourish.

Here at Unbeatable Loans, my commitment revolves around ensuring that our clients are not merely reacting to these financial waves but proactively navigating through them. It's about offering investors a vantage point from which they can foresee rate fluctuations and empowering them with the knowledge to craft and close profitable financing agreements. Even amidst the chaos that can often define financial marketplaces, our goal is to optimize the returns on every dollar invested, enhancing cash-on-cash yields for every investor we serve. By fostering a partnership with Unbeatable Loans, investors gain the ability to make informed, nimble decisions that position their portfolios for success, no matter the dual-speed nature of evolving market landscapes.

Upcoming Economic Events

• May 22, 2025: Initial Jobless Claims and S&P Flash U.S. Services PMI data releases. MarketWatch+1Federal Reserve Bank of New York+1

• May 27, 2025: Federal Reserve Chair Jerome Powell is scheduled to speak, potentially providing insights into future monetary policy. Trading Economics

• May 31, 2025: Release of the Personal Consumption Expenditures (PCE) Price Index, a key inflation measure watched by the Fed.

• June 12, 2025: Consumer Price Index (CPI) data for May will be released, offering another look at inflation trends.

• June 18, 2025: Federal Open Market Committee (FOMC) meeting, where interest rate decisions and economic projections will be announced.

Current Interest Rates Snapshot

• Federal Funds Rate: Held steady at 4.25%–4.50% as of the May 2025 meeting.

• 30-Year Fixed Mortgage Rate: Averaging around 6.81%, the highest since late April.

• 10-Year Treasury Yield: Rising to approximately 4.5% following Moody's downgrade of U.S. credit.

Want to talk strategy?
Whether you’re shopping for your next property or looking to refinance at the right time, we’re here to help you interpret the bond market, forecast mortgage trends, and find the right loan for your goals.

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