Weekly Mortgage Rates

July 22, 2025

It's The End Of The Fed As We Know It (And I Feel Fine)

Former Fed governor and potential next Fed chair, Kevin Warsh was on CNBC last week. He argued that the Fed has a credibility crisis. This was made evident as emergency rate cuts last September ended up pushing long-term rates higher as the bond market lost faith in the Fed. 

He laid out a case that the Fed is using antiquated theory from the 1970’s. Which says that inflation is caused by workers getting paid too much in the economy being too hot. “Our central bank doesn’t see that we were in the front-end of an economic, boom…AI will make everything cost less, bringing inflation down.”

Instead, he said “Inflation happens when the government prints too much, spends too much, and lives too well.” This is one of the reasons that a change in Fed rate won’t automatically improve mortgage rates. Monetary policy by the Fed is less effective now as Fiscal dominance (high public debt) now drives free market interest rates. 

Cooler Heads Prevail

It takes time to digest change. Tariff related inflation fears have cooled a bit.   Last week’s consumer sentiment report shows a slightly more optimistic consumer with a decrease in inflation expectations. This is working from a low bar from the worst levels seen after the April announcements, but an improvement is an improvement.

June’s retail sales report showed the consumer is hanging on. It rose 0.6%, a significant improvement from May’s -0.9%. However, this non-inflation-adjusted report may reflect higher prices rather than increased purchases.

What’s Ahead

With few economic releases this week, attention focuses on the August 1st tariff deadline, which Trump insists is firm. Mortgage rates dipped slightly Monday as funds flowed into bonds, a safe haven amid uncertainty. After two weeks of rising rates, this offers a brief reprieve. The Fed meeting is next week, so we expect to be mostly treading water until then.

Market Strategies

Bank statement loans for self-employed borrowers have become more mainstream and are helping self-employed borrowers get into homes. If your client is holding off because they think their taxes won’t show the income needed to qualify, a bank statement loan is a perfect alternative. How does it work? We average the last 12 months business bank deposits and deduct for expenses based on the business type.