This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
Interest rates for the week remained flat. An important piece of context to the discussion surrounding high mortgage rates is that today’s rates in the ballpark of 7% feel high because of the recent memory of rates in the range of 2% to 3%. Those rates were possible as the federal government took virtually unprecedented action trying to prevent recession as the country battled a global pandemic.
However, under more typical economic conditions, experts agree we’re unlikely to see such dramatically low interest rates again. And, historically, rates in the vicinity of 7% are not abnormally high.
Consider this St. Louis Fed (FRED) chart tracking Freddie Mac data on the 30-year, fixed-rate mortgage average. From the 1970s through the 1990s, such rates were more or less the norm, with a massive spike in the early 1980s. In fact, September, October, and November of 1981 all saw mortgage interest rates above 18%.
Fed Watch: Target rate (in bps) possibilities, according to the CMEGroup (as of 09/25/2025 – 12:00 PM EST):
Summer 2025 Was the Strongest Buyer’s Market on Record
Unemployment Rate by Metro Area:
Fannie Mae – Economic and Housing Outlook – September 2025:
Redfin Home Price Index and Metro Level Summary:
Between2010 and 2019, net household formation averaged 1.1 million/year. In 2020, it shrank by 128,000, but in 2021 and 2022 it rose to 1.48 million and 1.27 million, respectively, and that growth was what primarily drove up home prices and rents. In 2023 and 2024 net formations averaged just 507,000/year. With the southern border virtually sealed and net immigration very low, this suggests significantly reduced housing pressures going forward. - Elliot F. Eisenberg the Bowtie Economist
News You Can Use:
· Speech by Chair Powell on the economic outlook - Federal Reserve Board
· Mortgage Rates Expected to Move Below 6 Percent by End of 2026 | Fannie Mae
· Mortgage Applications Increased in Latest MBA Weekly Survey | MBA
· Summer 2025 Was the Strongest Buyer’s Market on Record
· August new home sales soar 20%
· Seasonal hiring 2025 to fall to lowest level since 2009 recession
· Single-family rent growth is starting to show new weakness
· St. Louis Fed President Musalem sees 'limited room' for more interest rate cuts
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 09/25/2025, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. Actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 09/25/2025 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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