Cutting the Red Tape, Tracking the Rates: What Inflation and GDP Say About Mortgages in 2025 📌

Slower growth and sticky inflation are making mortgage rates do the cha-cha—here’s what’s behind the moves and what it means for you.

💸 PCE Inflation: The Fed’s Favorite Frenemy

The latest inflation numbers are in, and the Fed isn’t exactly celebrating.

The 🔗Personal Consumption Expenditures (PCE) index—the Federal Reserve’s preferred inflation gauge—🔗rose 2.3% year-over-year in May, while the core PCE (excluding food and energy) clocked in at 2.7%.

That’s still above the Fed’s comfy 2% target. Translation? The idea of rate cuts anytime soon is floating just out of reach, like the last donut in the break room.

Why it matters: Mortgage rates tend to follow inflation’s lead. Higher PCE = more pressure on the Fed to hold or hike rates = tougher borrowing costs.

📉 GDP Growth: Slamming the Brakes

Just days before the PCE update, the final Q1 2025 🔗Gross Domestic Product (GDP) numbers dropped—and they weren’t exactly inspiring.

The 🔗economy contracted 0.5%, marking the first quarterly dip in nearly three years. The main cause? A massive 37.9% surge in imports as businesses tried to beat incoming tariffs. Consumer spending rose, and exports were up too—but not enough to cancel out that drag.

While a single quarter doesn’t equal a full-blown recession, this slowdown is a red flag that the economy is struggling to find stable footing.

Why it matters: In a normal world, economic slowdowns = lower interest rates. But pair a slowdown with persistent inflation? That’s when things get weird. And mortgage rates don’t like weird.

🏠 The Mortgage Market: Stuck in the Middle

Right now, mortgage rates are holding steady—but they’re doing it with one eye on inflation and the other on growth.

With inflation proving stubborn and the economy flashing mixed signals, rates aren’t dropping like many had hoped this summer. It’s not unheard of, but it’s definitely not the “cut rates and ride” market some were expecting.

Bottom line: We’re in a “wait and see” environment—and waiting too long could cost you.

🐼 Mama Bear Jenn Patel Says: “Don’t Let Headlines Hold You Back”

Markets may be mixed, but your plan doesn’t have to be. Whether you're buying your first home or refinancing to create breathing room, the key is knowing your options and acting with intention.

Let’s talk strategy. Don’t wait for perfect—plan for possible. 💼