Portland Mortgage Market Update — October 24, 2025

DATA! Sweet, sweet inflation data! Yes, today brought the only piece of data that will be provided during the government shutdown, the CPI report. One analyst hyperbolically called it an "oasis slaking the thirst of a weary desert traveler", and employees were brought back despite the shutdown because this CPI report is a requirement to determine the Cost of Living Adjustments that will be made to social security benefits next year. Thankfully it beat the market estimates of 3.1% year over year coming in at 3.0%. This helped push the 10 yr treasury yields back below 4% which should help interest rates.

One of the factors in the CPI report that helped was surprisingly the Owners Equivalent Rent component. The OER is effectively a "guess" on what homeowners think they could rent their home out for if they needed to. This always seemed odd to me that such weighting would be given to a data point that is inherently skewed (a major part of being a homeowner is pride of ownership, and if you are proud of your home you are likely to think it may have more value than it actually does—listing agents know what I am talking about), This has been one of the criticisms of the BLS in how they calculate their data; too much of it is imputed or guesswork. In any case, owners seem to be coming to grips with reality and pricing their homes more accurately.

Rate cuts on the horizon! Next week brings the Fed meeting and the market is currently betting a 97% chance of a 25 basis point cut, with a 96% chance of another 25 bps cut in December's meeting. The stock market is on a tear today with the improved CPI report all but assuring a cut next week, but historically mortgage rates have spiked right after a Fed cut. It will be interesting to see that trend continues this time around when there are back to back rate cuts almost guaranteed. I will be monitoring things closely next week and I think a lot will rely on what Powell has to say in his post-meeting remarks.