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Continued Uncertainty Over the Direction of Mortgage Rates

Welcome back to the Mortgage Rundown. Today we are going to talk about what’s happening with interest rates.

It’s hard to believe that we are almost halfway through 2025 and yet we still don’t have a clear direction on interest rates.  

This year, the 10-year U.S. Treasury yield reached as high as 4.8% in January before dropping all the way down to 4% in April. Today we stand close to a 4.3% yield with a ton of uncertainty around where rates will go from here.

The tariff disputes from earlier this year are expected to be mildly inflationary, which is keeping rates somewhat higher. The tariff issues have also caused somewhat of disaster for U.S. Treasuries. This is also impacting mortgage rates, pushing them higher as well.

Meanwhile, it appears the economy is slowing down very moderately and unemployment is also rising very slowly. Thankfully for the mortgage industry, these are keeping interest rates from racing higher while we wait for key inflation data for June and July in the coming months.

As it pertains to the U.S. Federal Reserve and managing all of these risks, it’s widely anticipated that they will lower rates twice this year as inflationary risks begin to dissipate.

Tomorrow we will see data on Personal Consumption Expenditures (PCE) for May, which is the Fed’s preferred inflation gauge data. Next week we will see the employment numbers for June. Any surprises and the interest rate volatility we have seen so far in 2025 will continue.

That’s it everyone from the capital markets desk this week. Thank you all for watching and have a great day.

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Jason has 23 years of executive experience and expertise in the mortgage industry, developing and managing Capital Markets for financial institutions.

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