PULSE 08/21/2025: Rates Are Falling, ARMs Are Back, and Powell’s Jackson Hole Signal

Lower mortgage rates, an ARM comeback, and a pivotal Fed moment are reshaping late-summer housing dynamics. This episode breaks down what buyers, sellers, and pros should watch as affordability improves—and where strategy matters most.

• 30-yr fixed averages ~6.5–6.6% (lowest since Oct ’24) as apps rise and refis surge (~45% of volume) 🔻📈
• ARM edge: 7/6 SOFR ~6.13%; many 5/6 quotes sub-6% → meaningful monthly savings vs fixed (know the risks & the fully-indexed-rate qualifier) 🧮
• Inflation check: CPI 2.7% YoY headline / 3.1% core; next up—PCE on 08/29 (the Fed’s preferred gauge) 🔎
• Jackson Hole: Powell speaks Friday 10am; tone could sway cut expectations and near-term mortgage pricing 🎤
• 2024 context: rates eased post-Jackson Hole and after the first cut—then firmed when guidance turned hawkish; expect data-dependence again 🧭
• Housing pulse: more price cuts and longer DOM in several markets; hyper-local conditions drive negotiation odds 🏠
• Strategy: target stale listings, ask for concessions/buydowns (especially powerful with ARMs), and don’t overreact to any single headline ✅
• Pros: lead with empathy—tight wallets mean value framing, clarity on options, and ongoing rate monitoring for clients 💬

Subscribe and share if this helped you navigate today’s market. Want a personal scenario run? DM Pete for a quick numbers check. #MortgageRates #HousingMarket #RealEstate #Refinance #ARM #JacksonHole

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Peter D'Angelo | NMLS: 885309 | Branch Manager | Guaranteed Rate, Inc., NMLS 2611
Peter.DAngelo@Rate.com

*All information, topics, discussion is my own personal opinion and insight, not reflective of Guaranteed Rate, Inc. May contain market information for informational purposes only, not to be used as financial advice.

Transcript

Copy of Podcast_Update-08.21.2025

 [00:00:00] 

Microphone: Welcome back to the Pulse and Perspective. I am your host, Pete D'Angelo, with your weekly mortgage and real estate market update today, August 21st, 2025. I am excited that I get to actually share some good news here for a couple weeks after most of this year was. Not great news. It was a tough rate environment.

Microphone: It's been a tough and competitive real estate market for a couple years now, and things are changing, and some may even say changing for the better. Those interest rates are where we're going to start today. The average 30 year fixed rate mortgage, according to mortgage News daily survey. Of mortgage rates across the country is between 6.5 to 6.6%.

Microphone: This is, again, the lowest environment that we've seen since October of 2024. Also, we are seeing an increase of activity [00:01:00] for mortgage applications, so that is. People applying for mortgages. We've seen that uptick, we talked about that week ending for August 15th. Now, uh, we are seeing that up about 10.5% consistent with the week prior, but the share of those applications, over 45% are refinances and that is likely due to people understanding cost savings right now if they've purchased.

Microphone: Anytime in the past, you know, pretty much back since October. And then there's another opportunity for those buyers who had the higher rates when they were purchasing in the beginning of the spring end of winter of 2024 when rates started coming up again. So there's opportunity for cost savings.

Microphone: Consumers are taking advantage of that, but that also means that more than 50% of that increase is attributed to people who are now back in the market, maybe back in the market shopping, which could mean. More competition. The drop in the interest [00:02:00] rates are still squarely due to the fact that we saw the soft jobs number.

Microphone: Uh, and there was a little bit of a rub we talked about last week with the consumer price index to, we're going to recap that again in just a moment, but the environment has stayed relatively stable when we're looking back at the past week. The lock in suppression is still an effect, and this lock in suppression that I'm referring to is the fact that people have locked in interest rates below 5% and some even below 4%, and that's causing people to hold steady, maybe not sell their home, maybe not refinance because there's no reason to, or they're leveraging other mortgage programs like second mortgages, home equity lines of credit to tap into their home equity.

Microphone: That is still in effect, but there's a shift happening there because I think that people have needs that need to be met now in outgrowing space or committing to the [00:03:00] activity of shopping for a home and now having a little bit more of a softer market, which again, will also get into that a little bit later.

Microphone: I wanted to highlight one thing. Adjustable rate mortgages, uh, quick recap. Adjustable rate mortgages are. Mortgages that are not fixed for a full term of your mortgage. That means they are open to change with the market. They're attached to a market index. They have a margin on top of that, and that's how you get your adjustable rate mortgage.

Microphone: That being said, they have an introductory period with very likely a lower interest rate, and that introductory period is based on the type of adjustable rate mortgage. We call those arms. Well, right now. The seven six SOFR adjustable rate mortgage. That means you have a locked in interest rate for seven years, and then after seven years, that rate will adjust every six months based on a market indicator.

Microphone: That's at [00:04:00] 6.13% right now. That is down from 6.15% on August 15th. Slight improvement, but where we see the most benefit is comparing that to the 30 year fixed rate mortgage that we just talked about at 6.5%. That's a half a percent difference. That's that's some solid buying power right there that could be opened up if you are interested in an adjustable rate.

Microphone: Mortgage also. Really good to highlight the fact that there are five one arms and five six arms. That would mean your interest rate is locked in for the first five years and adjusting in a five one arm every year or in a five, six arm adjusting every six months after your introductory period of five years, those interest rates have gotten even better.

Microphone: Look according to Mortgage News Daily's survey of five six adjustable rate mortgages. Those are. Quoting below 6%, 5.9, and in that range, that's quite a bit of savings monthly. [00:05:00] Now I want to contextualize this adjustable rate mortgages are risky. You need to be comfortable and open to the fact that these rates can change over time.

Microphone: Now, thinking about where we've been in this market and what the marketplace looks like right now with respect to interest rates, if you are getting locked into a, an interest rate that's discounted. Half a percent to maybe even three quarters of a percent lower than what a 30 year fixed rate mortgage is.

Microphone: The, the nice part about the 30 year fixed rate mortgage is, you know that payment isn't going to change, but it's more expensive. The adjustable rate mortgages have a discount right now the way that this market is, and you can take advantage of that and have a lower cost for your housing payment, but your payment can adjust over time.

Microphone: The perfect way to illustrate this risk is something that was very unique that actually happened in England, in the United States. For some additional [00:06:00] context, we are a little bit of an outlier here where we have the ability to have fixed rate, long-term financing. When we look at the rest of the world, this is not necessarily.

Microphone: Customary and in a place like the UK in England, what was happening with the interest rate environment increasing Most of the financing in the UK was adjustable, and what that presents as a risk to the homeowner is that the monthly payment now. Will go up. And one of the issues that happened when the interest rates started going up in 2022 and into 2023 was in England, people were getting priced out of the homes that they currently lived in.

Microphone: It became a big problem. It was managed, but that was something that is a perfect way of illustrating some of the risk that you have to be sure that you're prepared for. Now that being said, when you're buying a home as a primary residence. There's no prepayment penalty. By and large, I know [00:07:00] in the state of New Jersey, prepayment penalties are illegal.

Microphone: So if you're living in that property, you cannot have a prepayment penalty on your financing. That means you are empowered. You can pay off that loan as quickly as you like. That being said, you have the ability to refinance. So if interest rates start going up and you have an adjustable rate mortgage, it's going to be very important that you include in your planning that you're number one going to have to keep an eye on that interest rate and make sure that it doesn't run away on you and become something that's.

Microphone: Less affordable than it was originally. Number two, understand that you've gotta work with your mortgage professional long term. We're here for you for the long term. We're not just here for that one transaction. You're going to want to work with them to ensure that if interest rates start going up, you may wanna lock in at a 30 year when interest rates go down.

Microphone: So that's where there's an additional complexity. Point number three, routinely when I'm assisting clients with. Reviewing their options to refinance. Part of that [00:08:00] calculus is, well, you've got a 30 year fixed rate mortgage. Now we can adjust the term, save you long-term interest, or we can adjust your payment to provide short-term relief or you know, monthly relief on what your housing payment is.

Microphone: And that's a pretty simple thing to calculate because you can compare what's my interest rate now, what is the interest rate that I can get when it comes to an adjustable rate mortgage sometimes. You can refinance your adjustable rate mortgage from, let's say a 5.6% interest rate to a 30 year fixed rate, 5.6% interest rate, and there's still a benefit there.

Microphone: No, it's not a tangible monthly payment benefit like is customary when we look at comparing 30 year to 30 year, but when the interest rates are at a level that you can lock in long term. That can still make sense. So there's just a couple things that I wanted to highlight with respect to adjustable rate mortgages, because I think that's very important to understand.

Microphone: So that being said, 30 or fixed rate mortgages being a [00:09:00] half a percent to three quarters of a percent higher than what these adjustables are offering maybe worth considering. If you can stomach the risk and you feel capable and comfortable with having that plan for your mortgage, it cannot be something that you kind of set and forget.

Microphone: Moving on, we're gonna do that little check on inflation that I mentioned earlier. Brief recap. The headline CPI that we got was 2.7% up year over year. And the core CPI, that's what excludes the volatile elements like food and energy that came in much hotter at 3.1% higher costs year over year. The month over month is firming out.

Microphone: But they are looking, and when I say they, I'm talking about those speculating within the marketplace. The traders for bonds, which all affect interest rates and the Federal Reserve. I saved the best for last there because inflation is something that's going to be making things a little bit more [00:10:00] difficult for them.

Microphone: We got the weak jobs numbers that shows us, oh boy, maybe the Fed needs to step in here and lower some costs of financing to provide some relief. Yeah, but then we get this inflation report and one of the biggest downsides to the Federal Reserve lowering their benchmark interest rate is stoking the fires of inflation further.

Microphone: And it is proving to be sticky. So that is a complexity that they have to manage, and it is not an easy task. the next key inflation indicator that's going to be coming up other than the consumer price index is next week on August 29th, we are going to get the Fed's preferred inflation gauge.

Microphone: That's the personal consumption expenditure. That's the one that the Fed looks at more so we're gonna have to keep an eye on that. That will inform. What the market is going to anticipate is, again, interest rates are not really very closely tied to what the Fed fund rate is. Now, we've learned over the past couple [00:11:00] years, the market is.

Microphone: Proactive about speculating what is going to happen, and that's what's going to create the interest rate environment. Now, there's gonna be some context for this when we start talking about Fed chair Jerome Powell, because there's something important happening this week with respect to that. The housing market, really brief recap.

Microphone: Uh, we're still seeing a consistent trend here that we've been identifying over the past couple weeks. Price cuts are elevated. We're seeing more homes with price cuts and negotiation happening nationwide. Also, it's important to know that the strategy right now is to keep an eye out for the listings that have been.

Microphone: On the market for a longer period of time. If you are a buyer, that's opportunity. If you are a seller of one of those properties, it may require reconsideration of your pricing strategy, maybe having a conversation with your real estate professional to that effect. [00:12:00] Moving on, I was mentioning about Jerome Powell.

Microphone: This is important Fed here. Jerome Powell makes his. Announcements after fed meetings and shares what the Federal Reserve's decision on policy is. And right now we're very intently focused on that because their policy is informing the traders on Wall Street, which is what creates the rate environment, or at least a large component of that.

Microphone: But outside of the cadence of those meetings Fed members, as I mentioned in the past, there are multiple Fed governors involved when they sit on the board of the Federal Reserve to make decisions on monetary policy and vote on it. Well, they do go out and they make comments. They will appear on news broadcasts.

Microphone: They may even appear at summits and economic summits. That's what we're talking about right here with Fed Chair Jerome Powell, what they say influences the market and will [00:13:00] influence what happens with interest rates. Jackson Hole is an economic summit that happens every year, last week of August. This is a mortgage and real estate podcast.

Microphone: Why are we talking about economic summits? Well, well, the reason for that is Jerome Powell. When he goes there, he normally prepares a speech and he prepares a presentation. And in that presentation we get a look at. Where his head is at with anticipation of what is going to transpire at the next fed meeting.

Microphone: The market is anticipating that we are going to see a rate cut and it is almost guaranteeing it right now the way that the market is currently trading. Jerome Powell speaking at this summit, can't influence the market's expectations for that rate cut. Expectations are tempered right now because the data's there.

Microphone: The job market is showing weakness. And something else that's on the horizon and that we are expecting I'm going to get into in a moment with respect to [00:14:00] the labor market. Fed Chair Jerome Powell, though, is going to speak at 10:00 AM on Friday this week. When he speaks there, he's a keynote speaker. We're going to understand what he's thinking.

Microphone: Some of the context for why this is important to us right now. Before Jerome Powell's 2024 speech at Jackson Hole, we saw. Fixed rate mortgage at 6.46%. Sound familiar? Oh, okay. And the week ending, August 22nd, 2024. Immediately afterward, we saw interest rates go down to 6.35%, and all this data is according to mortgage News Daily and Freddie Mac.

Microphone: Then into the meeting in September. So now following us along this timeline, now the Fed is actually meeting. They make their interest rate policy announcement that they're cutting for the first time and they're cutting by half a percent an aggressive cut because they feel like they [00:15:00] may have missed the opportunity to cut in July.

Microphone: Oh my gosh. Is this sounding familiar? It should now. After that first cut, they cut a half a percent off their benchmark interest rate, and then mortgage rates dropped 6.09% according to Freddie Mac that week. That was the best rate environment that we saw. That's what we're comparing ourselves to right now and where we are here in 2025.

Microphone: Now, if this happens again, we're going to see interest rates come down very likely. Unless they take what's called a hawkish tone and they say, we need to stay really data dependent. This is not what people expect right now, but it's a reality that could happen. And if the, the history of what's happened here is, uh, a rhythm of what's going to happen now.

Microphone: Maybe we could be looking at an even better rate environment going into the fall. It's not a guarantee, but the likelihood is there. But I wanna also put a big [00:16:00] asterisk on this. After October of 2024, we saw interest rates go up. The fed cut by a half a percent. The next fed meeting, they came out cut by another quarter of a percent, but their language was very hawkish and they were.

Microphone: They were saying they're going to stay data dependent and to temporary expectations about further rate cuts, and that this is an interest rate cutting campaign that was going to go on for a while. They said, we're gonna remain data dependent, wait and see, but right now we believe that we need to adjust our monetary policy to support the economy because of the weakness in the job market.

Microphone: Speaking of the job market, let's talk about that. Job market revisions have been occurring. We saw May June payrolls revised downward to a combined 258,000 jobs. It means over a quarter of a million jobs were overstated in those reports. And when they revised that data, it came down that showed us that there's weakness in the job market.[00:17:00] 

Microphone: What we have to consider here is that we are also anticipating updated figures from the Bureau of Labor Statistics. They are the ones that provide us with these job numbers. That is coming out soon, and we're going to get some revisions from March, 2024 to March, 2025. Looking back at last year, March, 2023 to April, 2024.

Microphone: There was almost the exact figure TBD, but they reported 880,000 jobs overstated in that time period. So whereas we just talked about two months where it was a quarter of a million jobs overstated. When we go back, wind the clock back to 2024, when the BLS Bureau of Labor and Statistics came out with their new revision, they said Oopsie again, almost a million jobs, overstated.

Microphone: When they come out with their report from March, 2024 to April, 2025, we may be expecting to see another large revision if we saw that large revision [00:18:00] of a quarter million in just the past two months. And if we see a large revision there, that shows us that the labor market's in trouble and in much worse shape than the Fed originally thought while they've been managing their policy over the past year.

Microphone: What does all of this mean? Now, let's actually put this into contexts. We're gonna put this into the buckets. I wanna break this down for you. Buyers. I'm talking with you right now. How are you doing? I know it's tough out there, but it's getting better. Let's talk about why all this matters. Lower fixed rate mortgages have created an environment of more affordability that is great news.

Microphone: Adjustable rate mortgages are getting better, and that could even provide for you a lower monthly payment and lower housing cost. Pair that with some concessions by way of price that seemed to be occurring across the country, as well as maybe some incentives, seller concessions that you can use for buy downs on your interest rate, permanent buy [00:19:00] downs in adjustable rate mortgages.

Microphone: You can do that. Your money goes further when you do it in adjustable rate mortgages, so that's really great and there's a lot of power there if you have the stomach for the risk. That maybe your payment could adjust in the future, or you understand that maybe refinancing doesn't mean refinancing to a lower rate.

Microphone: A refinance opportunity could look like just fixing for 30 years a rate that is comparable to what you have with your adjustable rate mortgage. An important note for you. If you are a buyer interested in adjustable rate mortgages, you will have to qualify it, something that's called the fully indexed rate.

Microphone: I mentioned that there's a market index and a margin that creates your rate. Moving forward when it adjusts, the market index commonly is tied to something called the secured overnight funding rate. You can hop on Google and you can look up that secured overnight funding rate to see where [00:20:00] that is right now.

Microphone: Then there's a margin on top of that. That margin could be anywhere from two 2.5% to 3.5, 3.75%. So let's say that we have the secured overnight funding rate sitting somewhere around four point. Let's just do round easy numbers, 4%. Okay, we got 4% on the secured overnight funding rate. Your margin, let's say for easy numbers is two and a half.

Microphone: Two and a half plus four is six and a half. Six and a half would be your fully indexed rate. Wait a minute, that's not the rate that I'm getting. You're right. You are getting a lower interest rate and it's called an introductory rate. That's a discount for you for your beginning, locked in term. You will need to qualify though, as if you were repaying that mortgage at 6.5%.

Microphone: So adjustable rate mortgages are helpful. As a tool to realize more affordability, but it's not a qualification tool. It's not [00:21:00] going to help you qualify for more. You still need to be able to qualify at that fully indexed rate. In the scenario, I out outline outlined that six point a half percent sellers, let's, let's talk now.

Microphone: Things are changing. I'm sorry. You may not be able to sell your house for as much as you hoped for. With respect to how it's looking across the country, markets are hyper localized. Working with a professional in your market is the preferred course of action. They are going to give you the insights on the market trends as well as how those trends are developing in your localized market.

Microphone: The real estate market is moving at a breakneck speed compared to history. It's moving so much faster than it used to, and what that's doing is creating a localization effect. And the localization effect means that you can be in one county, and I'm gonna talk to New Jersey. You can be in Passe County, and then you can be down in Gloucester County and in Gloucester County.

Microphone: If you're shopping for a home, you [00:22:00] may be able to negotiate with a seller at this point. In certain markets, and that can be the case in North Jersey too. I just happen to know that North Jersey is quite a bit more competitive, but because of that localization effect, you really do need to rely on a local, trusted professional in the real estate realm so that you can get proper guidance on how to price your home.

Microphone: You don't want to be part of that statistic where we're seeing the days on market go for longer, that that's a compounding function. It's a compounding function of. Higher expectation for what their, what your home could sell for, and then having to kind of meet reality in the middle and maybe reduce your price or offer some seller incentives.

Microphone: It's always going to be more preferable and you can speak to a real estate agent about this. It's gonna be more preferable to price accordingly from the beginning and then market accordingly from the beginning. Price cuts don't look good. Then people are gonna start coming in and trying to even bid lower.

Microphone: And if that's the case, you're going to wind up probably not selling your [00:23:00] home for as much. Marketing is value just as much as your home is value. So bear that in mind. So making sure that keep, keep your eye on that. Also, the refi surge that's happening could be beneficial to you if you are a prospective seller.

Microphone: Maybe there's a refi potential to tap into your home equity, which has still gone up, um, to tap into your home equity if making it work in your property could make sense. So these are things to consider. As well as the adjustable rate mortgages home the phone. If you're somebody who is interested in selling your home and maybe you want to, um, take out some more money, but you want to have a more reasonable cost, explore an adjustable rate mortgage, that could be beneficial too.

Microphone: But at the end of the day, if you are a prospective seller, you have a reason and. Timing the market is an incredibly difficult task, and the ship may be sailing on what we have seen as a recent peak for home value, so bear that in mind. Work with a local real estate professional as far as [00:24:00] loan originators, people in my industry and real estate agents, these things are changing.

Microphone: At a rapid pace. So we need to make sure that we're keeping our clients informed. We are need to be the experts that this market and the world right now really requires because there's a higher level of detail and analysis that is required. On top of that, we talk about inflation, and I wanna put this in perspective for my fellow loan originators and real estate agents out there.

Microphone: Inflation means things cost more. The pocket is tighter. And it is a requirement for us as professionals now to approach these conversations about money and about value with a higher level of sensitivity. Because people are feeling it. People are feeling the pinch, they're feeling the pinch every time they go to the grocery store and everywhere else that they spend their money.

Microphone: We really do need to focus in and make sure that, [00:25:00] um, I'm, I'm a firm believer that the empathetic approach and understanding the client need is the utmost important thing that we can do as professionals in our industry. Okay. I wanna comment also now on, on regional. Things that are transpiring. I was talking about the hyper localization.

Microphone: This is what I'm talking about. There are certain regions that are much softer Right now. You can be bidding and negotiating on price in other areas, not so much. It's still very competitive, so keep an eye out for the region that you operate in as a professional that you may be interested in buying in or that you have a home that you're interested in selling in.

Microphone: That regional effect is getting more and more. Dense. So how it's operating is happening in a higher density in hyperlocalized markets. Now, looking ahead, these are the things we wanna keep our eye on the ball with. Ahead of next episode, and I'm particularly mentioning this 'cause any day now [00:26:00] my wife could go into labor and I may not be here to provide you with an update, but I will be here as soon as I possibly can.

Microphone: But, um, next this week, Friday, we've got Jerome Powell speaking at 10. Um, next week we have the personal consumption expenditure, the Fed's preferred inflation gauge. We also have the federal open market committee meeting in September, and that's where we're going to hear their decision on. Interest rate policy expectations are interest rates are gonna go down.

Microphone: We also need to keep an eye on those weekly mortgage applications, uh, for the real estate professionals out there. Keeping an eye on that can let you know the level of competition that could be transpiring, uh, in your market. But overall, it gives you a general look. Whether or not that's happening where you operate is another story, but at least gives you a clue.

Microphone: Here's some strategic takeaways for everybody. The momentum is shifting to the borrower borrower's favor. That's great. So if you've [00:27:00] been somebody interested in purchasing, now is an excellent time to revisit it. Reach out to me. Happy to give you an idea of what your qualification looks like, as well as what you can do to be successful in this market as it's shifting.

Microphone: Secondly. Don't overread or read too far in to any of the data points or the headlines that you're seeing. The market may react, but we can just manage ourselves prudently for that. And then lastly, operate where concessions live buyers, that's you, where you can find a deal, go to it. That is going to be the highest likelihood of success that you can find.

Microphone: That is it for me today. Thank you all so much for listening. I hope you found this helpful and useful. I look forward to. Possibly giving you an update next week, but if not, uh, you'll know that baby girl has arrived and I will be back as soon as I'm back from my paternity leave. I hope you all have a wonderful rest of your week and a great weekend.

Microphone: Take good [00:28:00] care.