Weekly Mortgage Rates

May 6, 2025

We had a lot of economic news to digest last week

 GDP for the 1^st quarter came in at -0.3 pointing to a slowdown in economic growth.

PCE inflation showed inflation flat for the month of March, but February was revised higher offsetting the better March reading. Rates didn’t react to this news at all.

But rates did react on Friday after the release of the jobs data showed the unemployment rate remained unchanged at 4.2% and solid hiring data in April. Rates ended the week higher after the release.

As economist Anna Wong pointed out- “One of the biggest improvements in job gains came from the employment services sector.” Yes, employment increased for those that help the jobless find jobs, how’s that for irony?

The Fed’s catch 22

I listened to CAR economist Jordan Levine speak at an economic update recently. He described the Fed’s dilemma perfectly. They are stuck in a catch 22 scenario, having to choose between continuing the inflation fight or step in and front run the potential of a recession, which would then risk even higher inflation. But waiting for the economic weakness to show up in the data risks an even deeper recession.

Tomorrow the Fed will conclude its May meeting with a policy statement. With no good options, we will see which side they choose. Given the strength of Friday’s jobs data, they have enough cover to continue with the ‘wait and see’ stance.

Financing Burritos and Coachella

You know the year is 2025 when 60% of tickets sold to Coachella were purchased using buy now and pay later financing and you can even get your door dash burrito now too using buy now pay later. 

Most of this financing doesn’t even show up on credit reports. You know what else hasn’t been showing up on credit reports? Student loan delinquencies and mortgage forbearances. 

In 2020 programs were put into place to help distressed borrowers through the pandemic. Student loan payments were paused and also mortgage forbearance options were expanded to help borrowers who were struggling. Mortgage forbearance programs that have continued to be used well after the pandemic are now all being pulled back according to FHFA.

According to Transunion 20.5% of student loan borrowers are seriously delinquent- an all-time high. FICO also confirms that student loan delinquencies haven’t been reported since March of 2020. As of yesterday, the Department of Education is resuming collections activities for these debts.

It’s possible the economy and consumer were not as strong as reported and that we have been living in a buy now pay later world. It is just now starting to show up on our credit report. 

What’s Ahead

All eyes on the Fed now for any change in policy stance tomorrow. No other major economic releases due this week. A tariff deal or two would help us out some here with pricing.