There’s a lot of misinformation floating around right now about mortgage rates.
Yes, they’re high. There’s no denying that. Today, the average 30-year fixed-rate mortgage is nearly 7% (gag).
But what most people don’t realize is that, as of February 2025, nearly 75% of American homeowners still have a mortgage rate under 5%.
And this, friends, is why people don’t want to move.
The Creature from Jekyll Island Federal Reserve has so distorted the economy that it’s hard to know which way is up.
Mortgage rates were kept artificially low for far too long — and now, we’re facing the consequences.
But politicians just can’t help themselves. They think they can micromanage the economy from the top down. It’s the perfect example of what F. A. Hayek called the “fatal conceit.”
The fatal conceit is the misguided belief that human reason can control the economy better than the spontaneous order that arises from free markets.
In his book, The Fatal Conceit: The Errors of Socialism, Hayek argues that prosperity ultimately emerges from private property, trade, and the rule of law — not from top-down planning.
Essentially, we can’t just ignore the evolutionary processes that have shaped our society from the beginning. At this point, the data clearly shows that when we try to play God, we encounter inefficiency (at best) and authoritarianism (at worst).
So, people are hanging on to their houses — because who knows what the Fed will try to pull next?
This is what we can tell you right now:
- Mortgage rates are expected to remain stable in the coming months. (Could this be because the Fed has decided to pause interest rate cuts for the foreseeable future? Yes, yes, it could.)
- The 30-year fixed mortgage rate is expected to average 6.8% in 2025. (So that it can massively decrease in 2026, right? Wrong. It’s likely to hang out around 6.5% next year. Thank you, Big Government.)
- Certain proposed economic policies, including a 25% tariff on lumber, could increase costs and impact the housing market. (Shock!)
Let’s break these down:
First of all, why did the Fed decide to screw us over again pause interest rate cuts?
Well, there is some (reasonable) concern regarding inflationary pressures. America is once again “steeling its economy” for the worst — and thereby creating exactly that outcome.
If you don’t know, our free market sensibilities see inflation as a tax. Call it “hidden” or “indirect,” but inflation always erodes the value of money, even without an explicit tax increase.
If it looks like a tax, functions like a tax, and makes you stare at your paycheck in disbelief like a tax…
Folks. It’s almost certainly a tax.
But we digress. As Big Government drains our bank accounts in the name of “helping,” mortgage rates will artificially stabilize, and they’ll set this problem aside for… well… as long as they can.
As for the 30-year fixed mortgage rate, we’re sorry to say that the situation is even bleaker. In addition to ungodly interest rates, there will likely be a deceleration in home price appreciation. (Think 3.5%, down from 5.8% in 2024.)
Of course, these forecasts can change on a dime. Optimistically, economic developments, policy decisions, and global events could all come together in our favor. It would be a first, but… it could happen.
And that brings us to tariffs. They’re a hot topic right now, and everyone has a different take, but from a free-market perspective… they suck.
Despite what you may have heard, the economic impact of tariffs is seldom regulated to foreign countries. Tariffs, like inflation, are taxes — and yes, Americans pay them. If construction costs rise, we’re all going to feel it.
The answer to these pressing economic issues? Same as always:
- Reduced government spending
- Fewer regulations that drive up costs and limit supply
- No more government-backed loans or bailouts
- More saving and investing
- Reduced taxes in all their sneaky forms
A free market never would have allowed these issues to occur.
The only thing we can do now is course-correct.
