Portland Mortgage Market Update — August 22, 2025

The market was only focused on one thing this week- the Jackson Hole Symposium and Fed Chair Powell's final speech. I touched on this last week, but to recap: each year the Fed meets in Jackson Hole to more or less recalibrate their monetary policy based on trending economic issues. Last year, after a dismal jobs report in July the Fed indicated they would cut rates (which they did in September 2024). This year, there was another dismal jobs report in July but we are also contending with tariffs that may or may not be propping up inflation. So while the stage was set for Powell to pivot a little on their policy and cut rates again, the market wasn't so sure it was going to happen.

They market is sure there will be a rate cut now! Before his speech, there was a 75% chance for a rate cut. Then he admitted "with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance". Sweeter words have never been spoken, we are getting a rate cut in September! Rates immediately improved (modestly) and the market is now estimating a 91% chance we get at least one rate cut in September and an 85% chance we get at least one more before the end of the year. That being said- traditionally when the Fed does cut interest rates, mortgage rates spike immediately thereafter for a bit. So if you have buyers sitting on the fence, let them know that the lowest rates come before the rate cut, then rates settle down after a couple of weeks (usually, but it could take longer given how chaotic everything is right now).

And one of the Fed stalwarts is on the hotseat. Fed Governor Lisa Cook is accused of committing "occupancy fraud" on loan applications, where she applied for financing two homes as her primary residence. She has been a proponent of keeping interest rates higher, and now President Trump is saying she will be fired if she doesn't resign. With her seat opening up, Trump can replace her with someone that will lower interest rates.