Mortgage Rates Plunge After Weak Jobs Data

Lead U.S. 30-year mortgage rates tumbled to 6.29% Friday after a weaker-than-expected August jobs report, even as the Federal Reserve held its benchmark rate at 4.25%-4.50%.

Nut Graf The sharp one-day drop in borrowing costs underscores growing market confidence that the Fed will cut rates when it meets September 16-17. Homebuyers saw the biggest single-session decline in over a year, amid signs of cooling labor-market strength and persistent, but easing, inflation.

Main Part

Subheading: Employment Shock Drives Rate Slide

• The Labor Department’s August employment report showed payroll gains below forecasts, prompting mortgage lenders to slash rates by an average 16 basis points on 30-year loans.
• Mortgage News Daily pegged the 30-year fixed rate at 6.29%, the lowest since October 2024 and down from roughly 6.45% Thursday evening.

Subheading: Weekly Averages Keep Declining

• Freddie Mac’s weekly survey for the week ending September 4 reported a 30-year fixed average of 6.50%, down six basis points from the prior week and marking a new low for 2025.
• The 15-year fixed rate averaged 5.60%, its lowest level in nearly a year, driving refinancing applications to surge as borrowers seek to lock in lower payments.

Subheading: Fed’s Steady Stance

• At its July 29-30 meeting, the Fed maintained its federal funds target at 4.25%-4.50%, the fifth consecutive hold since December 2024.
• Markets now assign an 87% probability of a 25-basis-point cut at the mid-September meeting, according to CME’s FedWatch tool, reflecting expectations that cooler growth and easing inflation will prompt policy easing.

Outlook Analysts caution that while mortgage rates often move on Fed signals, they do not always track one-for-one with the federal funds rate. Borrowers weighing home purchases or refinancing should monitor incoming inflation data and the August jobs report due next week, which could further sway market expectations.