10/13/25 REcap: A Quiet Week for Mortgage Rates

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Consumer Sentiment Slides Again

The University of Michigan’s latest survey showed that consumers are increasingly uneasy about higher tariffs and the prolonged shutdown. The sentiment index fell to 55, just slightly above forecasts but the lowest since May. Inflation expectations were unchanged at 3.7% over the next five years, showing Americans aren’t convinced that prices will fall quickly.

Fed Minutes Confirm Support for More Easing

Minutes from the September 17th Fed meeting confirmed what markets expected — the Fed is preparing for more cuts this year. Officials were nearly unanimous in supporting September’s quarter-point move, but split 10–9 on whether to deliver one or two more cuts before year-end.

New Fed Governor Stephen Miran, Trump’s appointee, was the lone dissenter, pushing for a half-point cut and a faster pace of easing. Most members agreed that labor market risks now outweigh inflation concerns, noting that price pressures from tariffs are likely temporary.

With the shutdown halting major data releases, the Fed may need to make its next move without fresh numbers on jobs or inflation—but the direction is clear: more cuts are coming. The faster the market believes they'll come, the faster we'll see mortgage rates fall.

Mortgage Activity Softens Slightly

Even though rates remain near 12-month lows, mortgage demand cooled last week. According to the Mortgage Bankers Association (MBA), refinance applications fell 8% from the prior week but remain 18% higher than a year ago.

Adjustable-rate mortgage (ARM) share ticked up to 9.5% of total applications, up from 8.4%, as borrowers take advantage of short-term savings -  the mortgage rate for a 5/1 ARM product is currently about a 0.5% lower than a 30-year fixed. Purchase applications dropped 1% week-over-week but were still up 14% year-over-year.

Looking Ahead: Limited Data, Big Implications

With the government still shut down, the next few weeks could be light on new reports. That means traders will have to rely more on Fed speeches and market signals to gauge where policy is headed.

Normally, we’d expect to see key economic reports like the Consumer Price Index (CPI), Retail Sales, and Housing Starts this week — all of which offer critical insight into inflation and demand. Unless the shutdown ends soon, those releases will be postponed, extending this period of unusually low volatility in mortgage markets.