Newsletter-July 7th, 2025    
Mark A Gelbman
Loan Officer | NMLS# 112342
Union Home Mortgage
97 Mill St
Rochester, MI 48309
Cell Phone: (248) 705-8431
E-Mail: mgelbman@uhm.com
   
 

Market Comment

Mortgage bond prices finished the week slightly lower which put upward pressure on rates. Rates were flat most of the week with some selling Thursday morning tied to strong employment data. The U.S. Administration pushed for the Fed Chair to cut rates, and Powell responded with caution. He noted, “In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs.” The data showed a solid economy with very little price pressures. ISM Index was 49 vs 48.8. ADP employment fell 33K vs the expected 95K increase. Unemployment came in at 4.1% vs 4.3%. Payrolls rose 147K vs 110K. Average hourly earnings rose 0.2% vs 0.3%. Weekly jobless claims were 233K vs 240K. The trade deficit was $71.5B vs $71B. Mortgage interest rates finished the week worse by approximately 1/8 of a discount point.



LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

3-year Treasury Note Auction

Tuesday, July 8,
1:15 pm, et

None

Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Credit

Tuesday, July 8,
3:00 pm, et

$18B Low importance. A significantly large increase may lead to lower mortgage interest rates.
10-year Treasury Note Auction

Wednesday, July 9,
1:15 pm, et

None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Minutes

Wednesday, July 9,
2:00 pm, et

None Important. Details of the last Fed meeting will be thoroughly analyzed.
Weekly Jobless Claims

Thursday, July 10,
8:30 am, et

235K

Important. An indication of employment. Higher claims may result in lower rates.
30Y Treasury Bond Auction

Thursday, July 10,
1:15 pm, et

None Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.

Credit Demand

Inflation is typically the most important focus for the mortgage interest rate market. A lot of increases in interest rates also come following stronger stocks. As stocks struggle, we often see rates improve. In addition, mortgage bonds often benefit from global economic uncertainty as investors search for safe havens amid economic concerns in the euro zone and elsewhere. This flight to quality buying of mortgage bonds helps push prices higher and mortgage interest rates lower.

The level of interest rates reflects the balance between the supply of money from investors and the demand for money by borrowers. Rising inflationary expectations and uncertainty about the performance of the bonds cause investors to require higher rates of return on investments. This compensates for the erosion of the principal that eventually is returned to them or the risk of non-performance.

Regardless of inflation levels, rising economic activity can increase the demand for investors’ funds, and thereby lead to higher interest rates. Investors pulling money out of bonds and into stocks could pressure mortgage rates. The demand for money diminishes as the economy struggles. The Fed raises interest rates to buffer demand from businesses and consumers. The Fed keeps rates higher to rebalance supply and demand pressures to help inflation fall to more manageable levels. Continued data showing the rate hikes are working will eventually push the Fed to pivot their high rate policy. Until then, a cautious approach to float/lock decisions is prudent.

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   MORTGAGE MARKET IN REVIEW Newsletter-July 7th, 2025