By Mike Bodeen · 29 September 2025
The “E” Word That Won’t
Autumn has arrived. Another Phoenix summer we’ve survived.😉
Mortgage rates, which had been up and down since a high point of 7.76%, had been on the decline for almost 2 years (Nov 2023). Last week, they hit a one-year low 6.2%! That is until the Fed expectedly dropped the Federal Funds rate by .25%. Following this move, mortgage rates, which are not always so impressed to immediately follow suit after such drops, saw rates rise.
When rates had dropped below 6.5%, it seemed like buyers were finally beginning to get off the proverbial fence, though It’s too early to see if that trend continues.
The big “R” word, recession, is good for lowering mortgages rates. As the economy moves downward, the longer term 10-year bond lowers as demand for it increases. As this bond lowers, mortgage rates follow suit.
So, as we’ve mentioned several times on the Snapshot, the “E” word (Economy) will be dictating our mortgage rate direction, not the President, not the Congress, not even the Fed.
“It’s the economy stupid.” James Carville, who was a chief strategist for Bill Clinton’s presidential campaign in 1992, reminded Clinton’s campaign team to stay the course on one main fundamental issue when he memorably exhorted staff workers, “It’s the economy stupid.”
So where’s the economy currently at? Well, it’s been slipping towards a recession but according to most experts, hasn’t slid far enough.
If you’re actively trying to buy or sell a home, an economy that goes into or nears a recession will move mortgage rates lower spurring home sales. But do we want a recession? Yes, it can have the effect of lowering mortgage rates, but the cost is huge. Recessions bring job losses. Recessions bring home foreclosures. Recessions bring bankruptcies. Recessions are a bummer! Who wants to hope for that?
On the other hand, if the economy shows that inflation is under control, and the economy, especially jobs, are doing okay, the status quo remains; mortgage rates at current levels (read: still too high) with lower buying and selling still happening. Who wants that? Certainly not most buyers or sellers – or Realtors.
Enjoy Autumn!