Mortgage Update - May 26th, 2025
Happy Memorial Day! We hope you're able to take a moment to honor and remember the brave men and women who sacrificed their lives for our country.
No holiday slowdown for me and Nick! We’re still closely watching the financial markets and how current headlines are impacting the mortgage market. From trade talks to rising concerns about national debt, we are here to break it down for you! Let's goooo!
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Read time: ~4 minutes
"There are decades where nothing happens, and weeks where decades happen."
Read that headline again: "There are decades where nothing happens, and weeks where decades happen."
I stumbled across that quote the other day, and man did it hit hard! Nick and I have been working in this industry for a long time, and we can honestly say we’ve never felt more uncertain about the current direction of the market—or the broader economy—than we do right now.
And if we’re feeling this way as professionals, imagine how our clients must be feeling!
Because let’s be 100% transparent: the pace of change around us is staggering. AI is reshaping entire industries, global tensions are rising, our debt is ballooning, and political division feels deeper than ever. The noise is everywhere—and people are overwhelmed. They don’t know who to trust, and they’re grasping for clarity.
That's why now, more than ever, we need to show up as trusted guides for our people! Instead of sharing "sold-in-a-day" or "just-listed" posts, try sharing meaningful context about how big picture trends are impacting our local market. Because in uncertain times, people don't need hype. They need guidance and perspective!
Ok—off my soapbox...for now 🙂
Let’s talk about what’s really happening in our market....
Mortgage Rates Inch Higher—Again
I swear, I really do hate sharing negative news, but the reality is we're navigating uncertain times. Concerns over government spending and fiscal disillusionment are starting to take center stage.
Two major headlines pushed rates higher this week:
1. The “Big, Beautiful Bill”
The House passed President Trump’s “Big Beautiful Bill,” making his original tax cuts permanent and temporarily adding tax breaks on tips, overtime pay, and auto loan interest deduction. The bill now moves to the Senate—and while it offers some tax relief, it’s also projected to add nearly $4 trillion to the federal deficit over the next decade 👀
2. Weak Bond Auction
A weak 20-year Treasury bond auction shook both the bond and stock markets. When demand for bonds drops, mortgage rates tend to rise. It’s becoming clear that investors aren’t eager to buy the government’s growing debt (U.S. sells it debt through treasury bonds). This auction happened as Congress released updates on the federal budget, which pointed to more—not less—government spending, which only added to market worries.
The Big, Beautiful Bill may face pushback in the Senate, even among Republicans. In a rare note of criticism, Republican Ron Johnson expressed concern, saying: “We are mortgaging our children’s future. It’s wrong. It’s immoral. It has to stop.”
As always, Nick and I remain non-partisan. Our role is to keep you informed about how markets respond to the bigger picture. And right now, with national debt nearing $37 trillion, the bond market is clearly nervous. Regardless of Trumps political pressure to bring rates down, the bond market will ultimately decide the fate of mortgage rates. Unless spending and debt are brought under control, rates will continue to stay elevated and may continue to climb.
Key Takeaway: Mortgage rates rose again this week as concerns over the nation’s rising debt intensified. It’s becoming clear that selling U.S. debt through bonds is getting tougher. Fewer buyers for our bonds means higher yields—which results in higher mortgage rates.
U.S. Delays 50% Tariff on Europe
On Sunday evening, President Trump announced an agreement with the President of the European Commission to extend trade negotiations until July 9th—a move welcomed by Europe in hopes of reaching a deal that benefits both countries!
On the surface, this is great news! But how will the markets respond when they reopen on Tuesday?
To get a sense, let’s revisit what happened after the U.S. and China agreed to a 90-day tariff suspension starting May 12th/13th. The stock market surged:
Dow jumped +2.8%
S&P 500 climbed 3.3%
Nasdaq soared 4.4%
But the mortgage market told a different story.
As you can see from the chart above, mortgage rates actually increased, not decreased.
Why?
The 90-day tariff pause removed an immediate threat to corporate profits and reduced the odds of a near-term recession. At the same time, it dialed back expectations for immediate Fed rate cuts, pushing Treasury yields—and, by extension, mortgage rates—higher, even as the stock market pumped.
Key Takeaway: While tariff relief tends to lift the stock market, it can unintentionally put upward pressure on mortgage rates. So don’t be surprised if Tuesday brings a market rally—and potentially higher mortgage rates. We’re crossing our fingers that this time, mortgage rates break the trend. 🤞