Housing Market Update | Week of May 19th
Published: May 19, 2025
Updated: May 19, 2025

Housing Market Update | Week of May 19th

We have some big news impacting the housing market for the second Monday in a row after Moody’s Ratings lowered the United States’ credit rating from Aaa—the top credit rating—down a notch to Aa1 late Friday afternoon. The markets have been digesting this news this morning and we’ve seen the 10-year increase and stocks drop.
How the markets continue to digest this news will be one of the biggest storylines for the week ahead. Other than potential early week volatility, we have our weekly initial jobless claims report on Thursday before the markets close early on Friday for Memorial Day weekend.

Last Week's Mortgage Rate Recap
Rates Were Steady
The 10-year yield was pretty volatile last week, however, mortgage rates stayed within a stable range due to improved mortgage spreads. If not for those improved spreads, we likely would have seen mortgage rates increase last week. Fears that inflation would ramp up were delayed at least a month when both the CPI and PPI reports came in lower than expectations.

This Week's Mortgage Rate Forecast
Rates Could Be Volatile
What was set to be a quieter week looks like it could be a little bumpier now after Moody’s downgraded the U.S. credit rating from its top rating of Aaa down a notch to Aa1. In a statement, Moody’s said, “We expect federal deficits to widen… driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.”
This comes in the wake of a package of tax cuts proposed by House Republicans that failed to pass through the Budget Committee last week. According to Moody’s, if this budget were to pass, these tax cuts would add $4 trillion to the federal deficit over the next decade, not accounting for interest payments. So, how the market reacts will largely drive mortgage rate movements over the next two weeks.
In times of mortgage rate volatility, it’s important that we highlight the wealth-building benefits of homeownership to our clients and focus more on the monthly payment that they can afford rather than a specific listing price or rate. Feel free to use UMortgage's Monthly Payment Calculator to see how different mortgage rates, down payments, and home prices impact a monthly mortgage payment.
As the week progresses, make sure to stay in touch with your UMortgage Loan Originator for updates after certain reports are released or headlines are published.