Weekly Mortgage Rates

August 5, 2025

Where to begin?

A lot has happened since the last update. The week ended with mortgage rates dropping sharply following huge revisions to the employment data. Here’s a breakdown of the key events.

Dissention at the Federal Reserve Meeting

The Federal Reserve’s July meeting ended much as expected, with no policy change. However, for the first time since 1993, two Fed Governors—Christopher Waller and Michelle Bowman dissented, advocating for a 0.25% rate cut. Despite the dissent, the meeting had minimal market impact, but the rest of the week turned out to be more eventful.

Highlighting the growing dissention within the Fed, one Fed Governor resigned Friday leaving an opening for Trump to appoint a replacement and possibly the next Fed chair.

Inflation and GDP- Stronger Inflation and Slower Growth

Core PCE Inflation: The Core Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation measure, rose 0.3% month-over-month, with the annual rate climbing to 2.8% after upward revisions to May’s data.

GDP Growth: The initial Q2 2025 GDP estimate showed 3% annualized growth, a rebound from Q1’s -0.5% decline. However, import prices are skewing the reading. Stronger imports in Q1 (anticipating tariffs) reduced GDP, while weaker imports in Q2 boosted it. Stripping out imports, the data revealed weaker consumer demand.

Massive Revisions in the Jobs Report Shake Markets

If you haven’t heard yet, Friday’s jobs report was a game-changer that rocked markets and drove mortgage rates lower. Here are the key points:

• July Numbers: Nonfarm payrolls added 73,000 jobs, below the expected 110,000.
• Revisions: May and June job gains were revised down by 258,000 jobs, with May at +19,000 and June at +14,000. These are among the largest revisions since 1968 according to CNBC.

The revisions show the labor market slowing much more than previously thought. This issue with the data revisions is not a new problem. We have been talking about the discrepancies in the data for a while in the weekly update and have been critical of the antiquated system. In 2024 the revisions to the numbers were overstated by over 800k jobs on top of monthly revisions lower.

The Bureau of Labor Statistics (BLS) relies on business surveys with a declining response rate of less than 60% responding or responses coming in late. The BLS use their models to fill in the rest of the data leading to revisions once more data comes in. In response to the report Friday President Trump fired the head of the BLS citing political motivations. The transparency of what the BLS plans to do to improve accuracy will impact how the report is interpreted by markets moving forward.

Déjà Vu - Last Year’s Pattern Repeats

Last year the Fed held rates steady at the July 2024 meeting. That meeting was followed by significant downward job revisions, prompting a .50% rate cut in September 2024 as there was concern that they acted “too late”.

The timing of events feels similar, but the data points are different now. Rising inflation, slower growth, and policy changes (immigration, tariffs, taxes) create uncertainty still for mortgage rates. Last year, rate cuts spurred growth, pushing long term rates like mortgage higher.

Market Strategies

The recent improvement with rates is a good reason to reach out to our prospective buyers and sellers to share the news. Last year’s rate drop was short lived (6 weeks). Like mentioned above, many factors impact rates so we can’t say for certain the path forward, but we can take advantage of improvements now.