Weekly Mortgage Market Update – May 23, 2025
This week, mortgage rates climbed back above 7%, driven by rising Treasury yields and investor unease over the growing U.S. deficit. The average 30-year fixed mortgage rate reached 7.15%, the highest in over a year, reflecting bond market reactions to fiscal policy developments.
The bond market experienced volatility, with mortgage-backed securities (MBS) showing slight declines. The iShares MBS ETF (MBB) closed at $91.82, down from $92.37 the previous week, while the Vanguard MBS ETF (VMBS) ended at $45.34, a decrease from $45.64.
Economic data released this week painted a mixed picture. Jobless claims for the week ending May 17 were 227,000, slightly below expectations, indicating a still-resilient labor market. However, existing home sales in April fell to 4 million units, the slowest pace since 2009, highlighting ongoing challenges in the housing sector.
Investors are closely watching upcoming economic indicators, including durable goods orders, GDP revisions, and the Federal Reserve’s preferred inflation gauge, the Core PCE index. These data points will be critical in assessing the trajectory of mortgage rates in the coming weeks.
How Tariff News Is Influencing Mortgage Rates in 2025
Over the past few months, tariff-related headlines—particularly surrounding U.S.–China and U.S.–EU trade tensions—have created notable volatility in financial markets. Each new announcement, whether signaling escalation or temporary relief, has influenced investor sentiment and bond market performance. For mortgage rates, this has meant sudden swings, as tariffs can stoke inflation fears or dampen economic growth, both of which impact mortgage bond demand. Looking ahead, continued uncertainty or the implementation of higher tariffs could place upward pressure on mortgage rates by increasing inflation expectations. Conversely, if trade disputes ease or global growth slows, rates may stabilize or even decline.
What This Means for Raleigh Homebuyers
For homebuyers in Raleigh, the return of mortgage rates above 7% underscores the importance of strategic planning and market awareness. While today’s rates are elevated compared to the lows seen during the pandemic, they are still below the peak of 8.01% reached in October 2023. That context is critical—7% may seem high, but it represents a middle ground in what has been a volatile rate environment. With continued uncertainty driven by inflation trends, government spending debates, and global trade issues like tariff announcements, rates could move higher again with little warning. For buyers currently in the market, this means timing and preparation are key. Locking in a mortgage rate now could offer protection from future increases, especially as many experts predict rates may remain elevated through the summer. Working with a local lender like Certified Home Loans gives Raleigh-area buyers access to personalized rate monitoring, market insight, and guidance on when it makes the most sense to act.
Looking Ahead
Next week’s economic calendar is packed with high-impact reports that could shape the direction of mortgage rates heading into June. Among the most closely watched will be the durable goods orders report, which reflects business investment and consumer demand for long-lasting products. A sharp decline in this number—currently forecasted at -8% for April—could signal a weakening economic momentum, which may lead to downward pressure on interest rates.
Equally important is the revised reading of first-quarter GDP. The prior estimate showed strong growth at 2.4%, but economists are now expecting a surprising downward revision to -0.3%. If this contraction is confirmed, it could shift investor expectations toward a slowing economy, potentially prompting the bond market to rally and mortgage rates to decline.
However, the most influential report will likely be the Core PCE Price Index, the Federal Reserve’s preferred measure of inflation. This metric strips out volatile food and energy prices and offers a clear picture of underlying inflation trends. If Core PCE shows signs of cooling—especially if the year-over-year figure falls below the forecasted 2.6%—it could give the Fed more confidence to begin easing policy later in the year, which would be a welcome signal for rate-sensitive markets like housing.
Together, these data releases will offer critical insight into whether the economy is continuing to overheat or finally cooling in a way that could bring mortgage rates back down. For Raleigh homebuyers and homeowners considering refinancing, next week’s news could be pivotal in deciding whether to lock in a rate or wait for potential relief.
At Certified Home Loans, the Raleigh Mortgage Team is committed to helping Raleigh-area clients navigate the complexities of the mortgage market. Our team is here to provide personalized guidance and support to help you make informed decisions in today’s dynamic environment.
Have questions about your mortgage options? Contact us today to explore the best solutions tailored to your needs.
