Joe Cucchiara Explains Why Mortgage Rates Remain Unpredictable in 2025

The US mortgage market continues to face significant uncertainty in 2025, shaped by inflationary pressures, economic resilience, and investor reactions to global risks. While some anticipated rate relief as the Federal Reserve signaled a shift in monetary policy, mortgage rates remain higher than many had hoped. Joseph Cucchiara, a veteran mortgage advisor with Golden Empire Mortgage (GEM) and host of Real Estate Radio Live, offers perspective on what current trends mean for buyers, homeowners, and investors.

Market rates don't always follow Fed decisions

A common misconception among borrowers is that a drop in Fed interest rates will immediately lower mortgage rates. However, Cucchiara highlights a more nuanced reality. “People assume that when the Fed cuts rates, mortgage rates drop immediately. But it’s more complex than that—long-term rates are influenced by broader market forces,” he says. Mortgage rates are more closely tied to movements in the 10-year Treasury yield, which responds to investor sentiment, inflation expectations, and macroeconomic indicators.

The Fed’s aggressive rate hikes during 2022 and 2023 aimed to control inflation but led to multi-decade highs in mortgage rates. Although current policy is leaning toward cuts, persistent inflation and strong economic data have kept long-term rates from falling as expected. The result is a market where uncertainty continues to weigh on affordability and financial planning.

Locked-in homeowners limit housing supply

One of the structural issues exacerbating the housing market’s challenges is a lack of available inventory. Many homeowners refinanced during the pandemic when mortgage rates fell to historic lows—often around 3%—and are now reluctant to sell. This “lock-in effect” is limiting new listings and freezing movement in many regional markets. As Cucchiara points out, “We have a housing market where people don’t want to sell because they’re sitting on these incredibly low rates. Meanwhile, affordability is a challenge for new buyers, and demand is far outpacing supply.”

Debt burden grows despite low mortgage rates

Even as many homeowners benefit from low-rate mortgages, overall consumer debt in the US has been rising. Households have taken on additional high-interest obligations such as credit cards, personal loans, and HELOCs. According to Cucchiara, “We’ve never seen American consumers accumulate this much debt. Many will eventually need to consolidate, and when mortgage rates dip into the 5% range, refinancing activity will likely surge.” The disconnect between secured debt (mortgage) and unsecured debt (credit) is becoming a growing concern for financial advisors and economists alike.

Equity firms reshape homeownership dynamics

Adding to the complexity, large private equity firms have played an increasingly dominant role in the housing market, especially since the 2008 financial crisis. By acquiring vast numbers of single-family homes and converting them to rentals, these firms have disrupted traditional patterns of homeownership. As Cucchiara notes, “Private equity firms have bought up hundreds of thousands of homes since the 2008 financial crisis. This is distorting the natural homeownership cycle and limiting options for everyday buyers.”

Looking ahead, market analysts anticipate a potential correction by late 2025 or early 2026, depending on macroeconomic indicators like employment and inflation. In the meantime, buyers and investors are encouraged to track interest rate movements and local market dynamics carefully. “The smartest buyers are those who plan long-term,” says Cucchiara. “If rates come down, it could be a great time to buy—especially in markets where prices adjust to more reasonable levels.”

With volatility unlikely to disappear anytime soon, participants in the real estate sector will need to remain flexible, informed, and strategic in their financial decisions.