LoanStreet Monthly Newsletter — August 19, 2025
In this month’s edition of The LoanStreet Beat, we dive into insured lending with Mark III and Atlanta Postal Credit Union in the form of a webinar. Learn about their credit risk model and loss mitigation process. The webinar took place on August 6th and you can view the recording and transcripts here.
MKIII is a lending platform that uses proprietary credit models coupled with insurance protection to enable credit unions to approve more borrowers while mitigating the cost of defaults. The MKIII platform handles the complete digital loan process – from sourcing borrowers through digital channels to underwriting, verification, and loan packaging – while maintaining the credit union’s brand throughout the customer experience. This allows credit unions to responsibly expand their lending to a broader consumer base with protected economics, as approved loans are insured mitigating default risk.
Below, we will start with a recap of an active economic news cycle and share our observations on loan trading.
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LoanStreet Market Commentary
Months of concern about the job market came to a head in the July jobs report. Payrolls increased by 73,000, well below the median estimate of 104,000. More troubling were the downward revisions to prior months: May and June were revised lower by a combined 260,000 jobs, bringing average job growth over the past three months to just 35,000—the weakest pace since the pandemic. Following the report, yields across the curve fell by roughly 25 bps. The unemployment rate rose only 0.1%, largely because the labor force participation rate dropped to a three-month low. A smaller share of people actively looking for work helped offset upward pressure on the unemployment figure.
Inflation data remains less clear. June’s core PCE, the Fed’s preferred measure, accelerated to 2.8% year-over-year, signaling that disinflation progress has slowed. While manufacturers have so far absorbed tariff costs, limiting price pressures, that restraint is unlikely to persist indefinitely. In the July inflation report, the headline year-over-year figure came in below expectations—driven mainly by lower energy prices—while the core measure exceeded expectations, led by higher used car prices and services costs.
Loan Trading Trends and Implications
Credit unions remain active in loan participations, both on the buy and sell sides. On the sell side, strong buyer demand continues to support profitable trades. Sellers are confident they can bring deals to market each month and close within weeks, providing flexibility to take on additional volume and maintain an outlet should liquidity tighten.
On the buy side, the recent decline in benchmark yields has not yet been reflected in pool yields, allowing buyers to capture more spread without taking on additional risk. This window may be short-lived, as buy-side demand is increasing with more institutions supplementing loan growth through participations. As year-end approaches and more buyers assess origination volumes below plan, participation activity is expected to accelerate, likely tightening spreads unless even more sell-side volumes materialize.
Deep Dive: Mitigating Risk, Maximizing Return
This month the deep-dive is in webinar format. Use the link below to tune it to our conversion with the team at Mark III and Atlanta Postal Credit Union to explore insured unsecured personal loan participations.
Webinar → Mitigating Risk, Maximizing Return: The Strategic Advantage of Insured Lending
Monthly Economic Data Summary
- Based on the 7/31/2025 report, the PCE gauge of inflation was 0.3% MOM, in line with estimates, and up 2.6% YOY, above the 2.5% estimate.
- From the same report, core PCE, which excludes food and energy, was up 0.3% MOM, as expected, and 2.8% YOY, above the 2.7% estimate.
- On 8/12/2025 we received the latest CPI gauge of inflation, the headline was an increase of 0.2% MOM, matching estimates, while the YOY was up 2.7%, below the 2.8% estimate.
- The latest job report for July showed a 73k increase in nonfarm payrolls, below the 105k which was estimated.
- The latest used-vehicle Manheim Market Report for July showed a rise of 2.9% from a year ago.
- The Case-Shiller home price index showed national home prices increasing MOM by 0.4% while increasing YOY by 2.3%. These are lagging data and reflect the CS indices for 05/25.
- Based on the CME market watch tool, the expectation is for the first rate cut of 2025 to happen in September.
This article was authored by Matt Rudzinski, VP of Capital Markets
For more market commentary and to learn more about LoanStreet’s solutions, visit www.loan-street.com
Disclaimer
LoanStreet is not a Registered Exchange, Financial Planner, Investment Adviser, or Tax Adviser. The information provided herein is for general informational purposes only, and does not, and is not intended to, constitute legal, financial, investment, or tax advice.