Weekly Mortgage Rates

April 22, 2025

There were a couple days last week when rates improved a bit, but we start today right where we were last week. The main event impacting rates: Trump V Powell. 

Let’s keep things in perspective

Not trying to be Chicken Little here so before we get into this week’s events, we need to look at the big picture. Rates are still lower than this time last year. Last year at this time the average rate was 7.4%. For all our discussion on rates we are still just stuck in a range of low 6’s to 7. We are just on the higher end of that range today. This is important to relay to our customers who are nervous about the volatility. Now let’s get into “the sky is falling” portion of our update :)

“Too Late Powell”

It’s never a good sign when you get a nickname from Trump. Powell is now in that club. What makes the nickname stick is there is always some truth to it. Powell was “Too Late” during Covid to lower rates, famously remembered for saying it was transitory. Trump now is using that against him telling him he will be late again to react as central banks around the world lower rates to brace for the tariff fallout. 

Trump has floated the idea of firing Powell. His team is looking into the legality. Almost no one agrees that this is a good idea. If the president is allowed to influence monetary policy, it compromises credibility in the US dollar and investment.  Even floating the idea is hurting confidence in US assets as the past couple days have shown.

The rationale for central-bank independence is straightforward: Elected leaders are biased in favor of strong growth and low interest rates at the expense of inflation. Studies have found that inflation is lower when central banks are independent, in turn this helps keep interest rates low.

No matter where you land on the topic, the issue here for our purposes is the impact on markets. The U.S. has always been a safe haven for investors including other countries to put their money in with the full faith and credit of the U.S.A. backing it. That confidence is waning, and damage is being done whether Trump follows through on the threat or not.

Fed policy can only take you so far

I’m not sure why Trump is so focused on the Fed when the truth is the Fed has lost control of the bond market. We saw this clearly last year when the Fed lowered the Fed rate and mortgage rates responded by rising. The reason is that government spending is out of control. There is Fed policy and there is fiscal policy. Fiscal policy is controlled by Congress and is outside of the Fed’s control.

“We have a massive annual deficit. We are losing the ability to control interest rates. Tax cuts without serious spending cuts will severely damage our country by creating unsustainable debt.”- Senator Thomas Massie

The deficit is even more unsustainable if we lose our position as the world’s safe haven asset. It’s like having a low credit score, you get a higher rate to entice a lender to take a risk on you.

Trying to D.O.G.E. a bullet

Some of this shift in appetite for US investment was probably anticipated. Trump was not just counting on lower rates to help us through the tariff negotiations but also on D.O.G.E. to save on government spending.

Originally promising 2 trillion in government spending savings. But so far, the spending savings from D.O.G.E. have fallen short. The D.O.G.E. savings tracker today shows they estimate 160 billion in savings from the cuts they have implemented. Not much of an impact considering the fiscal year 2025 deficit alone will be 1.9 trillion. We are spending at a rapid pace, and we aren’t even in a recession…yet. 

What’s ahead

We haven’t spent much time focusing on recent economic reports because they aren’t currently driving rates.

Whether Powell lowers the Fed rate or not, the bond market will determine the direction for rates ahead.