This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
Interest rates remained flat for the week. This week's news focuses on caution and division among Federal Reserve officials regarding future interest rate cuts, despite most expecting more easing. The Federal Reserve lowered rates by 0.25% at its September meeting to a target range of 4-4.25%, but recent Fed minutes highlight concerns about persistent inflation and a split opinion on the pace of future cuts.
John C. Williams, president of the Federal Reserve Bank of New York, says he supports further interest rates cuts this year, even though inflation has moved away from the central bank’s 2 percent target in recent months. His rationale revolves around the labor market, where cracks have emerged.
Most members of the Fed's rate-setting committee supported further reductions to its key interest rate this year, according to minutes from last month's meeting released on Wednesday.
"The overall message appears to be that, although most participants are on board with further cuts, it probably won't take much for the FOMC to take a slower approach than it indicated last month," Stephen Brown, deputy chief North America economist at Capital Economics, said in a research note. "We still see scope for the Fed to skip its projected cut in December, based on our view that the economy and labor market will outperform current downbeat expectations."
Fed Watch: Target rate (in bps) possibilities, according to the CMEGroup (as of 10/09/2025 – 12:00 PM EST):
Refinancing Activity Surges in September
Homebuilder unsold completed inventory sits at a 16-year high: Housing markets to find deals in:
Survey of Consumer Expectations
25Q3 GDP growth is projected to have grown as fast as 3.8%. Yet, simultaneously, unemployment is worsening, hours worked are largely flat, and ADP suggests September employment declined. How can this dichotomy be? Maybe there’ll be data revisions, maybe it’s due to an anomaly like temporarily weak imports due to tariffs or strong EV sales due to expiring credits, but better yet, maybe it’s rising labor productivity related to Generative AI/LLM! - Elliot F. Eisenberg the Bowtie Economist
News You Can Use:
· Divided Fed officials saw another two interest rate cuts by the end of 2025, minutes show
· Borrowers head back to riskier mortgages, looking for any potential savings
· New York Fed: Consumer outlook sours as inflation expectations rise
· Home sales: Investors make up highest share of buyers in 5 years
· FICO Reshapes Access to Mortgage Credit Scores - The MortgagePoint
· 17% of Americans Are Delaying a Major Purchase Like a Home or Car Due to Government Shutdown
· Trump urges Fannie Mae and Freddie Mac to jumpstart stalled homebuilding | Mortgage Professional
· August 2025 Hottest Housing Markets—Realtor.com
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 10/09/2025, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. Actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by HomeServices Lending, LLC. Not available in all states. Rate is as of 10/09/2025 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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