Portland Mortgage Market Update — October 17, 2025

Rates stayed pretty steady with the absence of a working government this week. With the government shutdown a lot of important reports either are not coming or are delayed, so traders looked to outside influences to determine trading paths forward. Luckily we had two pretty significant indicators pop up that could bode well for future lower rates.

Fed Chair Jerome Powell spoke this week and more or less threw his hands up at the current situation. He acknowledged that the slowdown in hiring suggests that we still need rate cuts. He suggested there is no "risk free" path forward as inflation and unemployment continue to rise. But the biggest news he dropped was he announced the Fed plans to stop its Quantitative Tightening (QT) program. The Fed keeps a balance of equities and if the economy is stalling and needs liquidity, the Fed will purchase them to make sure they keep their value. The Fed purchased Billions during COVID to keep the economy afloat in a practice called Quantitative Easing. In the years past the pandemic, the Fed has been trying to sell these equities off their books, and in order to make these attractive their yields have to go up which as pushed interest rates up. By stopping this selling off practice, yields should drop back down which would bode well for interest rates, but it may be a bit bumpy until we get there.

Bad loans rocked the stock market yesterday as Zion Bank announced they were taking a $50M loss on a couple of commercial loans. The commercial loans were lent against NDFI's or "Nondepository Financial Institutions" which is a fancy term for a company that lends money but doesn't hold any deposits. NDFIs can include Mortgage Companies (such as Mortgage Express), Private asset managers and insurance companies. In this case, the NDFI dealt with auto financing and apparently pledged the same collateral for multiple different loans. When the loan in question did not perform, Zion and another lender (Western Alliance) had to write it off as a massive loss. In doing so, it sent the market into a tizzy over fears that other NDFI's are not as stable as they claimed to be, and since loans against NDFI's have increased by more than 50% in the past 12 months the market was worried about other banks taking additional hits and the stock market tanked as a result. Today's opening suggests that this may have been a "one off" and has mostly recovered, but the 10 yr yield dropped below 4% yesterday and is barely hanging on at that threshold (lower yields= lower rates)