Everything you need to know from January is right here at your fingertips. Read on for key takeaways for Mortgage Servicing Rights.

The US economy in January 2025 is characterized by uncertainty as President Trump settles into his second term. The potential impacts of his policies, particularly regarding tariffs and tax cuts, remain to be seen. Inflation is expected to rise due to threatened tariffs, which could make the Federal Reserve cautious about easing moves. Additionally, tariffs have been shown to weaken economic growth. Proposed tax cuts may keep the federal budget deficit high, contributing to rising bond yields and increasing national debt. The deportation of undocumented immigrants could reduce labor force growth, further impacting the economy. 

GDP increased 2.3% in the fourth quarter of 2024, down slightly from the 2.5% forecast. Consumer spending remains strong despite high prices and inflation that has fallen significantly but has yet to hit the Fed’s 2% target. Geopolitical events are still creating headwinds with the Russia-Ukraine and Israel-Hamas wars grinding on interminably. Oil prices are at $73/barrel.

The yield curve is now positively sloped. The 10-year Treasury is at 4.52, which is down 10bp from last month. The one-year is at 4.16 which is down 4bps from last month. The 30-year fixed rate mortgage is at 6.86% which is down 8bps from last month.

Prepay speeds remain low, although speeds on coupons above 6% are beginning to rise. The secondary market for servicing rights remains alive but cautious in its pricing.