Mortgage Rates and You

TAYLOR LAMBERT August 19, 2025

Let's recap some important data that happened last week. While CPI came in at 2.7%, which is cooler than the expected 2.8%, PPI & core PCE (what the Fed actually use to gauge inflation) both came in higher than expected. In fact, they are on an ascending trend. Since this data has been released, the market makers are placing their bets that, coming September, a 50bps cut will be warranted. If that's the case, it will be a bittersweet situation, depending on who you're asking!

If rate cuts finally get implemented, it's a no-brainer that current homeowners who bought in the last couple of years can refinance and lock in lower interest rates. As for potential homebuyers, the cost to buy a home will be lowered initially, but don't be surprised if sales prices start to pick back up, especially when we're in a declining inventory season (late fall and winter). So in summary, the housing market in the Bay Area is slower right now but may pick up soon!

Regardless, be mindful that the inflation metrics are foretelling a 2nd wave of untamed inflation. This makes me believe rate cuts could be short-lived with the current Fed. When we have a new Fed Chairman next year, we could be in for some real "fun."

Happy Tuesday!