Portland Mortgage Market Update — April 25, 2025

If this week had a theme it would be "stepping back". The White House ended last week with calls for the firing of Fed Chair Jerome Powell (over his inaction on cutting interest rates), which led to even more economic turmoil as the world sees the Fed as a stabilizing force. Then, on Tuesday Trump scaled back on the rhetoric saying he had "no intention" of firing Powell. That same day Treasury Secretary Scott Bessent said he thinks there will be a de-escalation on the US-China trade front which helped spur a market rally. Overall, rates improved for the week.

Questions about the future of interest rates. The question I am getting most frequently these days is about the future of interest rates. Where are they going? Will they get any lower? While this is always a hot topic, it seems to be a bigger concern in recent weeks. In my 2025 Housing and Mortgage Market Forecast I said "the biggest driver of mortgage rates and the economy is the Federal Reserve". After the past few weeks, I no longer believe that the Fed is driving this bus. In fact, I think this tariff/trade policy has ripped the steering wheel from the bus and thrown it out the window. The market is no longer laser-focused on inflation and labor reports and is in react-mode until things calm down.

So how should we proceed in this tumultuous rate climate? For one, don't try and play the market. Any indicators that you see on the horizon that should bring interest rates down may become obsolete once more tariffs are put in place or trade talks break down. The old adage "if you like it, lock it" has never been more true than it is now. Home buyers need to trust in their mortgage professionals that they are monitoring what is going on in the interest rate by the hour, and they should have a discussion about what kind of rate would be "good enough" but of course lower is better. For instance, I usually subscribe to multiple rate monitoring services and if things look like they are going to tank I automatically lock my pipeline in to get them on the sidelines. Then, if the market improves I negotiate a free float down for them. As we have seen, there may be dips in the market but they are short-lived and we all need to be ready to pounce on them when they occur.