Monthly RUNdown: October 21, 2025

Since mid-September, mortgage rates have roller coastered and now sit right on one-year lows, with the 30-year fixed around 6.2% and the 15-year fixed near 5.7%. That’s a slight improvement from last month’s 6.25-6.5% range, but we shouldn’t expect a free-fall anytime soon. The modest decline includes a mix of softer economic data, shifting expectations for Fed policy, and a few new sources of volatility, including the ongoing government shutdown and a new round of U.S.–China trade tension that’s rattling global markets. Read on for more detail into those!

As of October 1, the federal government entered a partial shutdown after Congress failed to pass a funding bill in time. While essential services continue to operate, most agencies have either closed or drastically reduced operations. The shutdown is expected to be a drag on the economy with analysts estimating billions of dollars in weekly output losses. The longer it goes, the more pressure it puts on both consumer confidence and job growth. That's why we've seen rates lowering this month. Ironically, a weaker economy should end up nudging long-term yields & mortgage rates slightly lower. However, if investors start demanding a higher “risk premium” for U.S. debt due to fiscal dysfunction, rates could climb instead. For now, the market seems to cautiously adjusting, waiting to see how long the standoff lasts.

Relations with China have flared up again. In early October, China announced new export restrictions on rare earth minerals and retaliatory port fees on U.S.-bound vessels, responding to the latest round of American trade tariffs. President Trump has threatened to double down with 100% tariffs on Chinese imports starting November 1 if talks don’t progress, raising fears of another trade war. For mortgage rates, these kinds of international shocks tend to create short-term volatility. Generally, yields fall as investors flock to safer assets like Treasuries, but they can also rebound quickly if inflation expectations tick up due to rising import prices.

The labor market continues to cool, with job gains coming in below expectations for multiple months now. Revisions to prior data also paint a picture of slower growth. While this isn’t great news for workers, it’s exactly the kind of data that helps the Federal Reserve justify further rate cuts. The Fed made its first cut of the year in September, lowering the benchmark rate to the 4.00–4.25% range, and markets are still betting on at least one more cut before year-end. The next Fed meeting on October 29th will be important to watch; not for whether we get a second cut (it's 97% priced in), but for what kind of tone the committee says about 2026. The more dovish the message, the better the odds that mortgage rates edge closer to the 6% mark in the near term.

Between the government shutdown, ongoing trade drama, and shifting expectations around inflation, there’s plenty of noise to sift through right now. We could easily see the shutdown end, a deal struck with China, and rates to shift upwards. We could also see the economy continue to struggle and rates to keep marching down.  For now, mortgage rates remain in a delicate balance. From what I am seeing personally, it does seem like more buyers are interested in getting in at these low 6 rates and purchasing in the next 6 months.