July 8, 2025 – Is The Economy Slowing Enough to Support Lower Rates?

Economic Commentary

The Federal Reserve will be meeting again at the end of the month and this meeting will be the last one scheduled before September – barring a national emergency. At least one Fed Governor has raised the possibility of a short-term rate decrease this month. However, this depends upon the direction of the economy. Thus far we have had plenty of evidence that the economy is slowing. This evidence has included slower retail spending, lower consumer confidence, falling housing starts, and shrinking industrial production.

While some members of the Fed are leaving open the possibility of a rate decrease, others are content to wait to see if the implementation of tariffs will reignite inflation. Thus far we have seen no uptick in inflation, as inflation has been trending downward for over two years. How long would it take for tariffs to contribute to increased inflation?  The timing, as well as whether tariffs will even have a significant effect at all are questions that do not seem to have answers at the present time. Here is the good news—the Fed does not have to lower short term rates for mortgage rates to fall. We have already seen a significant drop over the past several weeks without any Fed actions. 

Thus, more negative economic news is good news as far as interest rates are concerned. And the most important report of all was released last week. How did the June jobs report go?  The economy added 147,000 jobs last month. The previous two months of gains were revised upward slightly by 16,000 jobs, while the unemployment rate fell one tick to 4.1%.  Wage growth increased 0.2% monthly and 3.7% over the past year. Overall, this was a report that will not help the cause of the Fed lowering interest rates in July.  Though the employment sector has shown resilience, job gains have eased from the pace of the past two years.

Weekly Interest Rate Overview

The Markets. Mortgage rates continued to move downward, though they did rise a bit at the end of the week after the jobs report was released. According to the Freddie Mac weekly survey, 30-year fixed rates eased to 6.67% from 6.77% the previous week. In addition, 15-year loans decreased to 5.80%. A year ago, 30-year fixed rates averaged 6.95%, more than .25% than today. Attributed to Freddie Mac: “The average 30-year fixed-rate mortgage decreased for the fifth consecutive week. This is the largest weekly decline since early March. Declining mortgage rates are encouraging and, while overall affordability challenges remain, more sellers are entering the market giving prospective buyers an advantage.”  Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

A recent survey found that 24% of Americans haven’t checked their credit score in the past year. The survey, conducted by All About Cookies, found that among the respondents who haven’t checked their credit score in the past year, 16% said they don’t know how. In response to why they haven’t checked their score, 29% said they don’t want to pay for monitoring, 23% are worried that checking will hurt their score and 19% say they don’t have credit or a credit score. Only 79% of Gen Z respondents say they know their score, the lowest of any generation. On the flip side, 92% of Baby Boomers say they do know their score. Equal portions of Gen X and Millennials (both at 88%) report knowing their scores. Among those who check their score, 18% say they look weekly, 29% say they look every few weeks, 32% say every few months and 15% say a few times a year or less. Only 5% say once a year or less. However, fewer respondents check their credit report regularly, with only 10% saying weekly and 22% saying once a year or less. In terms of what people use to monitor their credit, 72% say they use a free bank or credit card service, 26% say they use a free subscription from a previous breach and 22% say they use an annual free credit report. Smaller portions pointed to a paid monitoring service or credit counseling service. And only 9% of respondents could correctly identify every factor that go into a credit score–namely payment history, the amount of money owed on existing lines of credit, length of credit history, new credit lines opened and credit mix.  Source: All About Cookies

People who own a home in the US may live longer, research published recently said. For American men in early adulthood who were born in the early twentieth century – from the first years of the 1900s – four months were added to their life expectancy. Oxford University said this was likely owing to positive factors tied to homeownership, including accumulation of wealth, stronger social ties, better living conditions, and mental health benefits. “My study finds homeownership has a meaningful positive impact on life expectancy,” Casey Breen, a senior postdoctoral research fellow at Oxford, said in a statement. “These results suggest that social policies that equitably expand homeownership opportunities for Black Americans may help narrow the gap between Black and white male life expectancy in the US.” Breen’s work was published in the journal Demography. Source: Independent

While the share of homes purchased by investors edged slightly higher, investor selling hit a record high with 10.8% of sellers representing investors in 2024, the highest investor seller share in the data’s history, according to a report out today from Realtor.com®. This significant shift in investor market participation comes as the overall housing market continues to adjust from the pandemic-era frenzy, with inventory levels improving, home price growth leveling off and rents easing. “Investor trends signal a transition,” said Danielle Hale, chief economist, Realtor.com®. “Nationwide, investors picked up more homes on net in 2024, as smaller investors were a growing majority of investor buyers. But with investors selling at a new high, the market saw the smallest net investor buying activity in five years, lessening one of the notable headwinds for entry-level buyers who often compete with investors.” Nationally, 13.0% of homes purchased in 2024 were bought by investors, a slight increase from 2023 but still below the 2022 peak of 13.3%. On the sell side, investors accounted for 10.8% of sellers in 2024, the highest share on record, up from 10.1% in 2023.  A significant trend observed in the 2024 data was the growing dominance of small investors. Small investors, defined as those entities that have purchased fewer than 10 homes, made up 59.2% of investor purchases, the highest share in the data’s history. In addition, while all-cash sales became more prevalent in the overall housing market in 2024, investors were more likely to utilize debt. All-cash investor sales fell to their lowest level since 2008, although they remained nearly double the cash share of total home sales. Source: PR Newswire