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Market Analysis 8.28.25: Rates Are A Little Better

Good Thursday morning from your Hometown lender,

Rates are a little better than yesterday, and reprice risk on the day is low.

Mortgage bonds have improved just a little bit each day over the last couple of days, despite starting each day off in the red. The gains aren’t huge by any means, and rate sheets only reflect the smallest of improvements, but it’s still better than a poke in the eye. This morning’s revised GDP numbers didn’t cause any movement, nor did the jobless claims that showed a resilient labor market. Really nothing different today than yesterday, as expected. Tomorrow brings the PCE inflation data and while that will move markets, the month’s end trading and the long holiday weekend, will often create consolidation on their own.

I’m leaning towards locking most loans rather than floating.

🏦 Mortgage Market Overview – August 28, 2025

  • 30-YR Fixed Mortgage: 6.58% (↔︎)
  • 15-YR Fixed Mortgage: 6.23% (↔︎)
  • 10-YR Treasury Yield: 4.29% (↑ +2bp)
  • FNMA 30YR 6.0 MBS Price: 102.18 (↑ +7bp)
  • Mortgage–Treasury spread: ~225bps (slightly compressed)
  • Yield curve remains flat (2s10s spread: 59bps), signaling economic uncertainty

📰 Economic & Political Headlines

🧠 Fed Policy Signals

  • Powell’s Jackson Hole speech confirmed the Fed is likely to cut rates in September, but future cuts hinge on inflation and employment data.
  • Fed officials remain cautious, emphasizing that inflation must show sustained moderation before easing aggressively.

📉 Labor Market & Inflation

  • Consumer Confidence rose to 97.4 vs. 96.4 expected—suggesting resilience despite rate pressures.
  • Durable Goods Orders fell -2.8%, but core orders (ex-transportation) rose +1.1%, signaling underlying strength.
  • Core PCE (Fed’s preferred inflation gauge) due Friday. Forecast: +0.3% MoM, +2.9% YoY.

🏠 Housing Market Update

  • MBA data shows mortgage applications down 0.5%, with purchases up 2.2% and refis down 3.5%.
  • Inventory is improving, and price growth is cooling—making buyers more active despite high rates.

🔮 Forward-Looking Rate Forecast

📉 Rate Cut Odds

  • Markets are pricing in a 90% chance of a 25bp Fed cut on Sept 17.
  • If Core PCE surprises to the upside, odds may fall—keeping mortgage rates sticky.

📈 Yield Curve & Recession Watch

  • Flat curve suggests uncertainty, not imminent recession.
  • A steeper curve would signal stronger growth expectations and could compress mortgage spreads.

💵 Global & Political Factors

  • Dollar Index rose to 98.60, limiting imported inflation for now.
  • Political tension around Fed governance (e.g., Trump’s call to remove Fed Governor Lisa Cook) may inject volatility into rate expectations.

📅 Weekly Economic Calendar (Aug 26–30, 2025)

  • Thu 8/28: Personal Income & Spending, Core PCE, Chicago PMI, Consumer Sentiment (Very High impact)
  • Fri 8/29: No major releases (Low impact)

🔔 Key Watchpoint: Tomorrow’s Core PCE and spending data will be pivotal. A hot inflation print could stall Fed easing and keep mortgage rates elevated.

📌 Strategic Takeaways for Clients

  • 🕒 Locking vs. Floating: Locking is prudent ahead of today’s inflation data.

Posted by Noble Home Loans | Equal Housing Lender | NMLS #328275 | For informational purposes only. Not a commitment to lend. Rates subject to change.

Stay safe and make today great!