Portland Mortgage Market Update — August 21, 2026

Indicators are leaning our way! We have had two months of lower inflation in the CPI reports. The labor reports are showing a weaker job market than expected. The stage is set for the Fed to ease interest rates, but despite the data rates are staying stubbornly high. What gives?

It's all about the treasuries. The government debt has reached an all time high of $40 Trillion. We pay more in interest on this debt than we do on Defense or Medicare (the only thing more expensive is Social Security). To help cover these costs, we continue to borrow by way of issuing treasury bonds, but the market isn't finding them as attractive as they once were because

• When you are borrowing money to pay for the interest on what you have already borrowed, it doesn't inspire a ton of confidence. • We have competition from Big Tech. Companies are issuing their own bonds to fund their AI data center buildouts

So, to make our bonds more attractive, we need to increase the yield on them (interest that the government pays back). And since Mortgage Rates are based on yields, rates are staying elevated. That being said, Treasury Secretary Scott Bessent announced this week that they would ramp up buying back the longer term bonds to create a scarcity in the market, which should lower their yields. There was an immediate, positive reaction to this announcement, but less than a day later the market sobered up and basically said "wait- how are you paying for this??" So before we were relying primarily on inflation and labor markets to dictate interest rates, but it appears the market is now starting to look at the overall economic health of the country.

To that end, Fannie Mae updated their rate forecast for the next 12 months, and it isn't what you want to hear. On Wednesday they released their August rate forecast, which predicted rates averaging 6.8% through mid 2027, then dropping to around 6.7% for the remainder of next year. This is about a .3% increase from their predictions just last month, and they cited national debt and inflationary pressures from higher oil prices as the reason. So for those buyers that are waiting for rates to drop, you better get comfortable because it might be a while.

Sorry for the Debbie Downer of a market update, but there is still a lot of good going on right now. National home appreciation is still up at 3% so those that are still entering the market are doing so at a great time. I am around all weekend so if there is anything I can do to help, please reach out!