Mortgage rates hit lowest levels of 2025

Following the surprising jobs report released on Friday, the 10-year yield dipped slightly on Monday. As a result, mortgage rates have reached a new low for 2025, with Mortgage Daily News reporting a rate of 6.57%. Remarkably, we haven’t seen a single Fed rate cut this year! The bond market influences the Federal Reserve, and the recent weak jobs report caused yields to drop significantly last Friday. Currently, the 10-year yield remains slightly lower. 

I discussed the jobs report in detail in this article and on this episode of the HousingWire Daily podcast. Given today’s drop, let’s discuss what we should focus on for the rest of the year.

Where does this drop fit in the forecast?

In my 2025 forecast, I anticipated the following ranges:

• Mortgage rates between 5.75% and 7.25%
• The 10-year yield fluctuating between 3.80% and 4.70%

Currently, we are about halfway through my projected mortgage rate range for 2025 and we are just 40 basis points away from the lowest level of my 10-year yield. Last year, I had a similar mortgage rate range of 7.25% to 5.75%, but the actual rates fluctuated between 7.50% and 6.08%.

During that period, the bond market was quite concerned about a potential recession, which caused the 10-year yield to drop as low as 3.63%. However, as economic data improved, bond yields and mortgage rates rose again, ultimately reaching 7.25%.

As I write this, the 10-year yield is at 4.20%. There has been a dramatic shift in yields since the recent jobs report, as shown in the chart below.

What to look for now

As always, weaker economic data may lower bond yields, potentially reaching my target of 3.80%. However, the market will need to justify taking bond yields lower after Powell’s hawkish Fed press conference. An additional factor to consider, following last Friday’s jobs report, is the possibility of Federal Reserve presidents advocating more strongly for rate cuts. This could result in an increasing number of voices opposing Jerome Powell.

Fed Governor Adriana Kugler resigned on Friday and I anticipate the White House will seek to appoint someone quickly to fill that position to challenge Jerome Powell at the next meeting. My good friend Neil Dutta has been mentioned as a potential candidate and he would be a very astute choice. No matter who is chosen, this appointment is something to keep an eye on.

Additionally, Treasury Secretary Scott Bessent’s upcoming application of the banking regulation for the Supplementary Leverage Ratio (SLR) may provide some relief for the 10-year yield. And if the labor market deteriorates and jobless claims rise — all bets are off. This situation would likely compel even Jerome Powell to adopt a more dovish stance more quickly. While I never want to see people lose jobs to get lower rates, it’s something to monitor for the rest of this year and into next year.

Conclusion

It’s been a crazy year and I’ve been saying for several months that the second half of 2025, starting with July, is going to be exciting — and it has been. We will be tracking all the economic and labor data and providing updates four times a week on the podcast.

It’s positive that mortgage rates have improved in 2025 and are almost at my target level. This suggests we might see a little more improvement from these levels.

While mortgage rates are currently at year-to-date lows, further declines will depend on the previously mentioned variables.