Mortgage rates stopped hyperventilating at 6.86%. HUD has tightened its belt by extending the waiting period for FHA borrowers to access home retention options from 18 to 24 months. The CMBS special servicing rate decreased by 21 basis points to 10.11% in March. Colorado is expanding protections for renters through new legislation. Let’s get you caught up and out the door in three minutes. Tim

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Key Takeaways

• Mortgage rates surged to 6.86% for 30-year fixed loans on April 16, reaching their highest level since December 2024, as markets react to inflation concerns and recent tariff announcements. 1
• Housing inventory continues to grow, with active listings up 35% year-over-year, though still 20% below 2019 levels. 2
• The Housing Supply Frameworks Act, introduced with bipartisan support in both the Senate and House, aims to help state and local governments modernize outdated zoning and land-use regulations. 3
• HUD issued Mortgagee Letter 2025-12 on April 15, reducing the waiting period for FHA borrowers to access home retention options from 24 months to 18 months, providing less frequent assistance to delinquent borrowers. 4
• Americans now need to earn $116,633 annually to afford a median-priced home—82% more than the $64,160 required for a typical rental. 5
• Office vacancy rates hit a record high of 19.8% in Q1 2025, while industrial vacancy increased to 5.7%, marking the eighth consecutive quarterly rise. 6

Residential Real Estate Markets

The residential real estate market shows mixed signals with growing inventory but persistent affordability challenges. Housing supply is improving but remains below healthy pre-pandemic levels. The gap between homeownership costs and rental expenses has reached historic highs, creating significant barriers for potential homebuyers.

• Inventory Growth: Active listings up 35% year-over-year but still 20% below 2019 levels, indicating an improving but still unhealthy market. 2
• Local Market Analysis: Closed sales in March were mostly for contracts signed in January and February when 30-year mortgage rates averaged 6.96% and 6.84%, before recent economic uncertainty. 7
• Price Pressure Warning: Areas with 5+ months of supply might see downward price pressures later this summer if sales remain sluggish. 7
• Affordability Gap: Americans now need $116,633 annual income to afford a median-priced home vs. $64,160 for typical rental—an 81.8% gap that has grown consistently since 2021. 5
• Income Shortfall: With U.S. median household income around $86,000, most Americans fall short by $30,000 to afford the median home price of $424,000. 5

Mortgage Markets

Mortgage rates surged to their highest levels since December 2024, with the 30-year fixed rate reaching 6.86%. This sharp increase reflects growing inflation concerns and market reactions to recent tariff announcements. The volatility is creating significant headwinds for the spring homebuying season as affordability continues to deteriorate.

• Rate Surge: 30-year fixed mortgage rates jumped to 6.86% on April 16, up from 6.79% the previous day and 6.61% a week ago, reaching their highest level since December 2024. 1
• Market Reaction: The surge follows the release of stronger-than-expected retail sales data and ongoing concerns about inflation, with markets now pricing in just one Fed rate cut for 2025. 1
• Bond Market Volatility: The 10-year Treasury yield, which strongly influences mortgage rates, climbed to 4.59%, its highest level since November 2024, as investors reassess inflation risks. 1
• Tariff Impact: Analysts attribute part of the rate increase to market concerns about inflationary pressures from President Trump’s recently announced tariffs on imports from 186 countries. 1
• Application Volume: Mortgage applications decreased 8.5% for the week ending April 11, with refinance volume dropping 12% and purchase volume falling 5%. 8
• ARM Popularity: Adjustable-rate mortgage share rose to 9.6% of total applications—highest since November 2023—as borrowers seek lower initial rates around 6%. 8

Economic & Political

The Housing Supply Frameworks Act has gained bipartisan support in Congress, offering a potential path to address the nation’s housing supply crisis. The bill would provide guidance and technical assistance to help communities modernize zoning and land-use regulations without imposing federal mandates. This legislation comes amid growing concern over restrictive local zoning as a major impediment to boosting housing supply.

• Bipartisan Support: Housing Supply Frameworks Act introduced in both Senate and House with support from Democrats and Republicans, including Sens. Lisa Blunt Rochester (D-Del.), John Fetterman (D-Pa.), Mike Crapo (R-Idaho), and Thom Tillis (R-N.C.), and Reps. Brittany Pettersen (D-Colo.) and Mike Flood (R-Neb.). 3
• Local Control: Bill would not impose federal mandates but instead equip communities with expert guidance, technical assistance, and best practices for locally driven policy reforms. 3
• Industry Support: Over 140 housing and planning organizations back the legislation, including National Association of REALTORS®, National Association of Home Builders, National Apartment Association, Habitat for Humanity, and American Planning Association. 3
• Tariff Impact: President Trump’s recently enacted tariffs on 186 countries (ranging from 10% to 50%) are creating market volatility and potentially driving up construction costs. 9

FHA Increases Home Retention Option Frequency

HUD announced a significant policy change to help struggling FHA borrowers. The change, detailed in Mortgagee Letter 2025-12 issued on April 15, will allow homeowners to access loss mitigation options more frequently.

• Waiting Period Reduction: HUD is reducing the frequency in which a delinquent borrower can take advantage from home retention options from one every 18 months to one every 24 months. 4
• Policy Rationale: Mitigate risks to the MMI Fund as delinquency rates increase. 4
• Implementation Timeline: Mortgagees may implement these changes immediately but must implement them no later than May 15, 2025. 4

Colorado Strengthens Renter Protections

Colorado is expanding protections for renters through new legislation. The Colorado House Judiciary Committee passed SB25-020 on April 16, giving the Attorney General and local governments more authority to enforce landlord-tenant laws. The bill aims to ensure safer housing conditions and hold property managers accountable.

• Enforcement Authority: Bill gives Colorado Attorney General power to enforce housing protections for victims of unlawful sexual behavior, stalking, or domestic violence, documentation requirements, and protections regarding bed bugs. 10
• Receivership Process: Establishes a process where, in severe cases, neglected residential properties may be placed into court-appointed receivership to oversee repairs and management. 10
• Committee Vote: SB25-020 passed by a vote of 6-5 on April 16, 2025, sponsored by Representatives Mandy Lindsay and Javier Mabrey. 10

Homeowner Debt Challenges

A new AmeriSave Mortgage survey reveals that homeowners are struggling with debt beyond just mortgages. Credit card debt is the largest source of financial strain, yet few homeowners are taking strategic approaches to debt management, including utilizing home equity.

• Debt Stress: One in four homeowners report feeling stressed about monthly bills, with one in 10 completely overwhelmed, according to survey of 1,250 owners. 11
• Credit Card Burden: About one in three homeowners carry credit card balances of $1,000 or more, making this their largest source of financial strain. 11
• Debt Management: Only about one-third of homeowners are taking a strategic approach to managing debt, with roughly half prioritizing paying off highest-interest cards first. 11
• Equity Underutilization: Less than one in 20 owners have used home equity to consolidate debt, with one in three not understanding how to use equity loans or lines of credit. 1

Commercial Real Estate Markets (including Multifamily)

Commercial real estate markets are showing signs of stress with record-high office vacancy rates and declining transaction volumes. The industrial sector is experiencing rising vacancy for the eighth consecutive quarter, while multifamily remains resilient with strong absorption. Financing conditions remain challenging as lenders tighten standards amid economic uncertainty and rising delinquency rates.

Market Trends

• Office Vacancy: Office vacancy rates hit a record high of 19.8% in Q1 2025, with net absorption remaining negative for the 13th consecutive quarter as companies continue to reduce footprints. 6
• Industrial Softening: Industrial vacancy increased to 5.7% in Q1, marking the eighth consecutive quarterly rise, though still below the 10-year pre-pandemic average of 7.2%. 13
• Multifamily Strength: Apartment demand hit a Q1 record with over 138,000 units absorbed, while new supply is slowing with 2025 deliveries expected to drop 26% from 2024 levels. 14
• Transaction Volume: Commercial property sales jumped 30% in February to $24.4 billion, led by retail (up 105%) and office (up 55%), signaling selective recovery in certain sectors. 15
• Office Distress: U.S. office distress reached $51.6 billion in Q4 2024, with an additional $74.7 billion at risk, as hybrid work models continue to impact demand for non-prime office spaces. 16

CRE Financing

• Delinquency Rates: Commercial mortgage delinquencies increased in Q4 2024, with CMBS delinquencies rising to 5.78%, up 0.63 percentage points from Q3, while bank-held mortgages saw a more modest increase to 1.26%. 17
• Loan Maturities: Nearly $1 trillion in commercial mortgages will mature in 2025, raising concerns about refinancing challenges in a higher interest rate environment with stricter underwriting standards. 17
• Regional Bank Pressure: Rising CRE delinquencies and looming loan maturities are squeezing regional banks, with office special servicing rates hitting a 25-year high of 16.19% in February 2025. 18
• Private Lenders: Private debt funds and alternative lenders are stepping in as traditional banks withdraw from CRE lending, with firms like Ares Management and Apollo Global increasing their market share. 18
• Tariff Impact: Recent tariff implementations are creating uncertainty in CRE financing, with concerns about inflationary pressures potentially delaying Federal Reserve rate cuts and complicating refinancing efforts. 19

CRE Servicing

• Special Servicing Decline: The CMBS special servicing rate decreased by 21 basis points to 10.11% in March 2025, after surging 45 basis points in February, with the office rate dropping 61 basis points to 15.58%. 20
• Loan Modifications: Major loan modifications in March included the $525 million 150 East 42nd Street office loan, which received a 36-month extension to September 2027, and the $109.9 million Colorado Mills retail loan, extended by 24 months. 21
• Delinquency Trends: The overall CMBS delinquency rate increased by 35 basis points to 6.65% in March, with multifamily delinquencies jumping 98 basis points while office delinquencies slightly decreased by 2 basis points to 9.76%. 21
• Proactive Workouts: Major property owners are pursuing proactive loan restructuring strategies, as seen with Starwood Capital Group’s efforts to modify its $577 million hotel CMBS loan despite a 2027 maturity date. 22
• Servicer Rankings: KeyBank National Association, CWCapital Asset Management, and PNC Real Estate/Midland Loan Services lead the commercial/multifamily mortgage servicing market, with significant portfolios of named special servicing loans. 23