Mortgage Rates Edge Up
Last week was packed with major economic data including inflation, the labor market, and overall economic activity. There were no significant surprises, however, and mortgage rates ended last week with little change.
Fed Holds, Cites Uncertainty
As expected, the Fed made no change to the federal funds rate, and the meeting statement was similar to the prior one. Officials continued to emphasize the high level of uncertainty about the economic outlook due to changes in government policies. The statement also elaborated on the challenge facing the Fed, since higher tariffs could lead to increasing unemployment and higher inflation. If both of these outcomes take place, lower rates would be the proper course to boost the labor market, but higher rates would be called for to fight rising prices. As a result, officials intend to proceed slowly on monetary policy changes to allow ample time to evaluate evolving economic conditions. Most investors anticipate that the Fed will lower the federal funds rate at the July meeting.
Services Sector Expands in April
The most significant economic report released last week came from the Institute of Supply Management and exceeded expectations. The ISM national services sector index rose to 51.6, above the consensus forecast and the highest level since February 2024. Readings above 50 indicate an expansion in the sector.
Trade Deficit Hits Record
The U.S. trade deficit surged to a record high of over $140 billion in March, as companies and consumers rush to purchase goods ahead of potentially higher prices. Global tariffs are set to rise significantly on July 6, although many countries reportedly are working on trade deals and one was reached with the UK this week. Imports of consumer goods also hit a record in March with large increases seen in a wide range of categories including pharmaceuticals, apparel, furniture, and household appliances.
Mortgage Rates for the week of 5-12-2025