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Market Analysis 9.25.25: Never A Straight Line

Good Thursday AM from your Hometown Lender,

… and this is why it is never a straight line up or down.

There is just so much data that comes out. Some of it will always be on the opposite side of the where the market is heading giving pause to any current momentum / trajectory. Today, a stronger Q2 GDP data and lower jobless claims than expected are the pressure points for bonds.

We are seeing rate sheets slowly but gradually worsen this week. Tomorrow morning’s PCE inflation data could give a bit of a reprieve, but that is only IF it comes in better (lower) than expected.

Are markets are starting to doubt that the Fed will cut its policy rate twice more this year?

It seems so as the 10yr yield is up by more than 1/8th of a point since the announcement. For the moment (and I mean this week) economic and labor market data don’t look weak enough to make it a requirement. We have a lot of time between now and the next Fed meeting at the end of October but the additional fly in the ointment is that if there is a government shutdown (over the budget), data like the jobs report due next Friday will not be produced.

Higher level insight:

🏦 Mortgage Market & Rate Analysis

Thursday, September 25, 2025

📊 Where Rates Stand Today

  • 30-Year Fixed: 6.37% (unchanged from yesterday)
  • 15-Year Fixed: 5.89% (down 0.01%)
  • 10-Year Treasury Yield: 4.188% (up 0.040%)
  • UMBS 30-Year 5.0: 99.02 (down 0.25)

Trend: Mortgage rates remain relatively flat this week despite volatility in the bond market. The 30-year fixed rate is holding near its lowest levels in nearly a year.

📰 Today’s Economic Data – 9/25

  • Durable Goods Orders (August): Surprised to the upside, driven by transportation equipment.
    Why it matters: Stronger orders suggest business investment is holding up, which could signal economic resilience — potentially limiting future rate cuts.
  • GDP Final Estimate (Q2): Released later today. Markets are watching for any revisions to growth that could influence Fed policy expectations.

🗓 Weekly Recap & Market Drivers

  • New Home Sales (9/24): Jumped 20% in August to a three-year high. Indicates strong buyer demand despite higher rates, likely driven by limited inventory and seasonal momentum.
  • Existing Home Sales: Fell 0.2% in August, slightly better than the expected -1.5%. Reflects affordability challenges and rate sensitivity among resale buyers.
  • Jobless Claims (9/25): Dropped to 218,000 — well below expectations. Suggests labor market remains tight, which could keep wage pressure and inflation elevated.
  • Mortgage Demand: After a brief refinance surge, demand has stalled again, as buyers wait for clearer signals from the Fed and rate markets.

🏛 Political & Policy Developments

  • Fed Rate Cut (9/17): The Federal Reserve lowered its benchmark rate by 25 basis points to 4.00%–4.25%.
  • Fed Chair Powell’s Comments (9/23): Emphasized a “data-dependent” approach and warned against assuming a steady path of cuts.
  • Legislative Watch: Housing affordability remains a hot topic, with policymakers reviewing FHLBank structures and liquidity access.
  • Global Trade & Tariffs: Ongoing negotiations continue to influence inflation expectations and investor sentiment.

🔮 Rate Outlook & What to Watch

  • Short Term (Next 1–2 Weeks): If GDP comes in soft and inflation remains tame, rates could dip slightly. Stronger data or hawkish Fed commentary could push rates back toward the 6.5% range.
  • Medium Term (Fall 2025): If the Fed follows through with additional cuts and economic data stays soft, well-qualified borrowers could see rates in the high-5% range by year-end. Risks include sticky inflation, weak Treasury auction demand, or geopolitical shocks.

📅 Key Economic Calendar – Sept 26–27, 2025

  • Thu 9/26: GDP Final Estimate (Q2) → High impact
  • Fri 9/27: Personal Income & Spending, PCE Index → Very High impact

💡 How to Explain This to Clients

“Mortgage rates are holding near their lowest levels in almost a year, thanks to the Fed’s recent rate cut and mixed economic signals. But because markets often move before the Fed — and sometimes bounce afterward — this could be a short-lived window. If you’re considering a refinance or purchase, now’s a great time to explore your options while rates are still favorable.”

Stay safe and make today great!