Mortgage 101 Podcast: Episode 22 - Top Gun Dogfight: Navigating the 2025 Housing Market

In Episode 22, hosts Anthony and Manley liken the 2025 housing market to a Top Gun dogfight, with 30-year fixed rates below 6.5% (down from the sevens) and over 5 million buyers reentering, fueling bidding wars. They warn that an imminent Fed rate cut (expected September 16-17, 2025) could trigger a refinance wave, causing convexity hedging that may push mortgage rates up short-term.

Strategies include locking rates now, making full-price offers, and acting fast with clean contracts. The episode includes a buzzword segment demystifying terms like refi boom and convexity hedging, a buyer success story, and a rate tracker highlighting the volatile market dynamics.

Listen to the full episode: https://youtu.be/n3q5wDeRdJo

[00:00] Welcome to Mortgage 101: Episode 22

Anthony: The housing market’s a Top Gun dogfight. Rates are dipping into the fives, and buyers are firing offers at every listing.

Manley: Everyone thinks a Fed rate cut means lower rates, but it could spark a refi wave, pushing mortgage rates up short-term.

Anthony: Stay tuned—we’ll show you how to avoid getting shot down in this chaotic market.

[01:17] Why Rates Rise After Fed Cuts

Manley: The 30-year fixed rate is below 6.5%, down from the sevens this summer. But mortgages follow the 10-year treasury yield plus a spread, not the Fed funds rate.

Anthony: When rates fall, a refi wave shortens mortgage bond lifespans. Investors hedge by selling treasuries, pushing yields up, and volatility widens the spread.

Manley: Result? Mortgage rates could stick higher for the first 10 trading days post-cut, with a 60% chance of a short-term spike. Lock now if you’re in escrow.

[03:50] Dogfights in the Housing Market

Anthony: Over 5 million buyers are back, turning window shopping into bidding wars. A year ago, sellers gave concessions; now, under-list offers get shot down.

Manley: Sellers with 2% rates aren’t budging. Buyers need full-price offers, clean contracts, and tight escrows to win. Hesitation loses both the house and the rate.

Anthony: A savvy lender is your co-pilot, ensuring your financing is locked and your offer is laser-focused.

[08:16] Refi Jets on the Horizon

Manley: Millions of homeowners with 6.5-7.5% rates are ready to refi as rates hit the low 6s and upper 5s, clogging lender pipelines.

Anthony: This refi flood triggers convexity hedging, widening spreads and killing lower rates before they reach buyers. The Fed’s cuts get counteracted by market dynamics.

Manley: The Fed’s reactive, not proactive, focusing only on inflation. This late-year cut could make things “ugly” short-term, keeping rates “catatonic.”

[10:31] Big W for the Week

Manley: A buyer faced 4-5 offers on a house but went full throttle: full list price, no contingencies, tight escrow. They won and closed before competitors could reload.

Anthony: Precision and guts, guided by a savvy lender, secure the win in this dogfight.

[11:47] Buzzword Breakdown

Ryan: Five buzzwords, no crash landings!

Refi Boom (Manley)

Manley: A swarm of homeowners refinancing when rates dip, clogging lender pipelines and pushing rates up temporarily due to hedging.

Convexity Hedging (Anthony)

Anthony: Mortgage companies selling treasuries to hedge against refi waves, bumping up yields and counteracting Fed cuts.

Spread Widening (Manley)

Manley: Extra drag when the mortgage rate spread over the 10-year treasury blows out to 250+ basis points in volatile markets, raising costs.

Full Price Offer (Anthony)

Anthony: Your afterburner in a dogfight—offering list price or building concessions into the purchase to beat competitors.

Higher for Longer (Manley)

Manley: Rates staying elevated due to sticky inflation and treasury supply, even with Fed cuts. Plan for months, not days, of higher rates.

[14:43] Rate Tracker: September 2025 Update

Anthony: 30-year fixed rates are below 6.5%, with VA loans in the upper 5s and FHA/conventional in the low 6s. The Fed meets September 16-17, but the cut’s already priced in.

Manley: Expect a short-term rate bump post-cut due to convexity and refi pressure. Lock now if in escrow; shop fast before the refi flood.

Anthony: Long-term, rates will drift lower once the refi wave clears, but it’ll take months, not days.

[15:44] Final Thoughts

Manley: The market’s a dogfight. Lock your rate, make clean offers, and act fast to avoid getting shot down.

Anthony: Don’t wait for perfect rates—the Fed’s cut won’t deliver instantly. Get your jet ready with a lender co-pilot.

Ryan: Like, subscribe, and DM us with topic ideas!

[16:34] Knock-Knock

Anthony: Knock, knock.

Manley: Who’s there?

Anthony: Jet.

Manley: Jet who?

Anthony: Jet ready, because if you’re not locked and loaded, you’re about to get shot down.

FAQ

Why might mortgage rates rise after a Fed cut?
A refi wave shortens mortgage bond lifespans, prompting investors to sell treasuries (convexity hedging), raising yields. Volatility widens the mortgage spread, pushing rates up short-term.

How do I win in a bidding war?
Offer full price, use clean contracts with no contingencies, and close fast. Work with a lender to lock rates and strengthen your offer.

What’s convexity hedging?
Mortgage companies sell treasuries to hedge against refi waves, increasing 10-year yields and temporarily raising mortgage rates.

When should I lock my rate?
Lock now if in escrow, as rates may spike post-Fed cut (September 16-17, 2025) due to refi pressure and convexity.