Weekly Mortgage Rates

May 14, 2025

Much ado about nothing

We had the Fed meeting, CPI inflation, and progress on tariff talks over the past week, but mortgage rates remained about the same to slightly higher.

CPI inflation reading yesterday continues to show a cooling trend. Core inflation rose 0.2% in April and now sits at 2.8% annually, slightly lower than expected. Any tariff related inflation was not present in the report. After a brief reaction, rates ended the day right where they began. Another report shrugged off as traders don’t think it shows the full picture yet.   

To thine own self be true

Powell remained true to himself at the Fed meeting held last week. A repeat of the recurring theme that the Fed remains in ‘wait and see’ mode. “Uncertainty about the economic outlook has increased further. The committee is attentive to both sides of its dual mandate and judges the risks of higher unemployment and higher inflation have risen.”

He is getting a lot of push back right now but Powell refuses to blink. He will speak tomorrow, and we will see if any of the recent tariff progress and inflation news changes his stance.

All that glitters is not gold

Seeing a vibe shift this week as sentiment improves with progress on tariff negotiations and de-escalation with China. However, mortgage rates rose as recession fears retreat, and money goes back to work in the stock market. 

Mortgage rates are tied to the bond market and the bond market is directly impacted by our debt that must be funded. Yesterday the fiscal deficit for the first 7 months of 2025 was announced to be 1 trillion, reported as the 3^rd largest ever. The interest is expected to be 1.2 trillion this year. This represents 25% of government revenue to service 36 trillion in debt. No wonder Trump wants lower rates. As Powell said last week, the debt level is “on an unsustainable path.”

The tax plan and actual revenue from tariffs could help, but also what impact these changes have on the economy will be important, but that might take a while to see. Some are projecting 2026 to show economic expansion. Keep in mind, economic growth doesn’t give us lower rates. Without a recession, the path to lower rates would require getting the deficit under control and lower inflation.

All the world is a stage- What’s ahead

For the rest of the week, more inflation data tomorrow with PPI inflation reading and retail sales to see how the consumer is faring out there. More trade progress will support the recent stock rally and will help lift consumer sentiment, relieving the uncertainty they feel. That is good for our industry. Mortgage rates may continue to be a sore subject for a while though.

Today rates moving higher and we are are at a key level. We were able to hold here last time we touched it and I hope it holds for us again.  We will see how it all plays out.