Good Tuesday morning from your Hometown Lender,
Rate sheets likely to show just a little bit of improvement from yesterday, with bonds eventually shrugging off this morning’s stronger than expected retail sales data after an initial reaction. There’s nothing that has changed since yesterday, rates aren’t likely to make any moves ahead of tomorrow’s Fed action (and even that isn’t likely to be huge).
🏦 Mortgage Market & Rate Analysis
Tuesday, September 16, 2025
📊 Where Rates Stand
30-Year Fixed: ~6.18%–6.37%
15-Year Fixed: ~5.19%–5.58%
FHA 30-Year Fixed: ~5.54%–6.36%
10-Year Treasury Yield: ~4.04% (steady ahead of Fed meeting)
Trend: Rates are holding near their lowest levels since October 2024, down from early-year highs above 7%.
📅 Today’s Economic Data – 9/16
- Retail Sales (August): Stronger than expected at +.6%.
- Why it matters: Retail sales are a key gauge of consumer spending, which drives ~70% of U.S. GDP. Stronger sales = growth resilience (rates-unfriendly). Softer sales = cooling demand (rates-friendly).
- Import Price Index (IPI): A secondary inflation measure. Unless it shows a big surprise, it’s unlikely to move markets.
- Industrial Production (August): Once a major market mover, now less impactful given the smaller role of manufacturing in the U.S. economy.
- Homebuilder Confidence Index: A sentiment gauge for housing; important for industry watchers but rarely shifts rates.
Market reaction so far: Mortgage rates are mostly steady this morning as investors wait for the Fed’s two-day policy meeting to begin.
🗓 This Week’s Backdrop
- Labor Market Weakness: Last week’s jobs report (+22k payrolls, unemployment up to 4.3%) and BLS revisions (-911k jobs from prior year) confirmed a cooling labor market.
- Inflation Data: CPI (9/11) came in slightly hotter on headline, but “supercore” inflation cooled, and jobless claims hit their highest since 2021. Markets interpreted this as enough softness to justify Fed easing.
- Producer Prices (9/10): Wholesale inflation was modest, reinforcing the disinflation narrative.
- Market Tone: Bond yields have held near 4.05%–4.10% on the 10-year, keeping mortgage rates in the low-6s.
🏛 Political & Policy Developments
- Federal Reserve Outlook: The Fed begins its two-day FOMC meeting today. Markets are pricing in a 95%+ probability of a 25 bp rate cut when the decision is announced tomorrow.
- Forward Guidance: Investors will be watching not just the cut, but the Fed’s “dot plot” and Chair’s press conference for clues on whether more cuts are likely in October and December.
- Political Climate: Fiscal debates in Washington remain tense, but a short-term funding deal has reduced near-term shutdown risk. Globally, trade policy and tariff discussions continue to influence inflation expectations and bond demand.
🔮 Forward-Looking Rate Expectations
Short Term (This Week):
- If retail sales are soft today and the Fed cuts tomorrow, rates could hold or improve slightly.
- If sales are strong and the Fed signals caution, rates could tick back up toward mid-6.4% range.
Medium Term (Fall 2025):
- Continued labor softness + easing inflation could bring well-qualified borrower rates into the high-5% range by year-end.
- Risks: Hot inflation surprises, stronger-than-expected growth, or weak Treasury auction demand.
📅 Key Economic Calendar – Sept 16–20, 2025
Tue 9/16 – Retail Sales, Import Prices, Industrial Production, Homebuilder Confidence (Medium)
Wed 9/17 – FOMC Rate Decision (2 p.m. ET) (Very High)
Thu 9/18 – Jobless Claims, Housing Starts (Medium)
Fri 9/19 – Leading Economic Indicators (Medium)
“Mortgage rates are holding near their lowest levels in almost a year. The Fed is expected to cut rates tomorrow, but history shows mortgage rates often move before the Fed — and can bounce afterward. Today’s retail sales report and tomorrow’s Fed decision are the key swing factors. If you’re considering a refinance or purchase, this is a smart time to review your options while rates are still favorable.”
Stay safe and. make today great!