Weekly Mortgage Rates

June 3, 2025

Interest rates edged lower last week, helped by stable inflation and stronger bond auctions. This despite ongoing trade uncertainties. Read on!

This time is different

Wall Street leaders, like Jamie Dimon, are sounding alarms about the bond market. Pointing to rising U.S. deficits (now at just over 120% of GDP) and a new tax bill that could increase borrowing. He warns that unchecked deficits could spike bond yields, pushing mortgage rates higher. Dimon says, ‘This time is different,’ urging swift action to address the debt crisis.

You should see the other guy

Japan’s bond market offers a cautionary tale. Their deficits are 250% of GDP and with weak growth and rising inflation, demand for Japan’s bonds has decreased. This impacts global markets, including ours. Less demand for bonds can drive up U.S. treasury yields pushing mortgage rates higher. 

Last week news that Japan plans to reduce long term bond issuance eased the pressure on bonds helping support an improvement in mortgage rates. 

It’s Taco Tuesday! 

Recent criticism of trade negotiations led to a new acronym that caught on, TACO (‘Trump Always Chickens Out’). The acronym highlights the current mood but probably not much other impact as a result. 

What really set back trade negotiations last week, was a federal court ruling that broad tariffs enacted via emergency powers may be illegal. A temporary stay keeps tariffs in place for now, but prolonged uncertainty could rattle bond markets and nudge rates up. 

Oh yeah, inflation

The PCE inflation reading is the Fed’s key measure, and it held steady and has been since February. Welcome news on the inflation front. PCE coming in at just 2.1% close to the Fed target of 2%. Core PCE is still at 2.5%. With inflation coming down the past few months and nearing the Fed’s target, that should support steady rates for now.

What’s ahead

This week’s jobs reports, culminating in Friday’s employment data, could influence rates if hiring slows or unemployment rises sharply—though significant shifts are unlikely. The bigger focus remains on trade talks and deficit spending. Progress in either could stabilize or lower rates further, while setbacks may increase volatility.