Portland Mortgage Market Update — August 8, 2025

Rates gave up some of their gains this week on a quieter economic news week. By "quieter" I mean there were no big reports being dropped, but there was still plenty to follow this week. Before we get into that, one item of note is the change in the mortgage rate spread. The Spread is the difference between the 30 yr fixed rate and the 10 yr Treasury yield. For the past 2.5 years mortgage rates have been at least 2.4% higher than the 10 yr Treasury Yield, at some points peaking above a 3% difference. This is because investors were trying to make as much money as possible on loans being originated at that time, under the assumption those loans would not be performing long term (they would be refinanced as soon as inflation was under control and the Fed started cutting their rates). Since 2012, the "normal" range for the Spread is between 1.6-2.0%, meaning if we start approaching that range again interest rates would be between 5.8-6.2% which would be HUGE for potential homebuyers.

New Fed member incoming! President Trump tapped Stephen Miran to replace Fed Governer Kugler's slot on the Fed. Miran is Chair of the Council of Economic Advisors and is the architect for the Mar-a-Lago Accord (which is new to me). The Accord aims to devalue the dollar, maintain status as the global reserve currency and restructure global economic relationships all through the implementation of tariffs. Given the state of global trade right now, it seems like Trump listens to and respects what Miran has to say. Beyond the new face of the Fed, if we look back to last June's Fed meeting notes they issued a dot-plot chart where 8 members wanted two rate cuts this year and 2 members wanted 3. It can be assumed that Miran wants to start cutting rates as soon as he is sworn in (which may or may not happen before the next meeting), but the market is betting an almost 90% chance we see a cut in September and an almost 60% chance we see another one in October.

Next week brings inflation reports in the CPI on Tuesday and the PPI on Thursday. The market is expecting things to be pretty tame all around, so hopefully the reports cooperate and rates can resume their improving trend.