The mortgage market just got a boost. Slower job growth, rising unemployment, and expectations of a Federal Reserve rate cut have pushed rates lower. If you have been waiting for the right time to look into financing, now may be a good time.
Job Growth Slows, Rates React
The August jobs report came in far below expectations: only 22,000 jobs added versus forecasts of 75,000. Even more telling, downward revisions show June actually lost jobs for the first time since 2020. The unemployment rate also rose to 4.3%.
This weaker data gave the bond market a lift, and when bond prices climb, mortgage rates fall. Today’s industry-published average top-tier 30-year fixed rate sits at 6.27% (according to mortgage news daily 9/12.25). That puts rates back in the range we last saw in Fall 2024.
For buyers and homeowners, these shifts can open new opportunities to purchase, refinance, or improve monthly cash flow.
Why Mortgage Rates Don’t Always Follow the Fed
A common misconception is that when the Fed cuts rates, mortgage rates automatically drop. That is not the case. Mortgage rates are set by the bond market, which reacts to economic data.
Last year proved this. In September 2024, the Fed cut its benchmark rate by half a percent, but mortgage rates rose nearly three-quarters of a percent in the following weeks. Why? The jobs market showed surprising strength, and investors worried inflation could return.
This year tells a different story. Jobs reports are cooling, and the bond market is responding with lower mortgage rates.
Signs of a Cooling Labor Market
- Private sector hiring slowed. ADP reported just 54,000 jobs created in August, nearly half July’s pace.
- Job openings fell. JOLTS data showed openings at a 10-month low, while hiring and quit rates remain near decade lows.
- Jobless claims remain elevated. Weekly filings are at a two-month high, with continuing claims above 1.9 million for 15 straight weeks.
Together, these signs point to a softer job market with less wage pressure and slower growth. That helps ease mortgage rates but also signals that the broader economy is cooling.
The Bigger Picture: Rate Cuts on the Horizon
With Fed Chair Powell signaling that a cut is likely, odds are nearly 100% that we will see one announced at next week’s Fed meeting. But remember, mortgage rates move more on jobs and inflation data than Fed policy announcements.
This week’s inflation reports the Producer Price Index on Wednesday and Consumer Price Index on Thursday will be key. If inflation continues to cool, it should reinforce the case for lower mortgage rates.
Why This Matters for You
Falling rates can create important opportunities:
- Homebuyers may see improved affordability and stronger negotiating power as demand picks up again.
- Current homeowners could benefit from refinancing to reduce payments, consolidate debt, or access cash.**
- Sellers may find more serious buyers returning to the market as affordability improves.
What You Should Do Next
At NEO Home Loans, we believe your mortgage should be part of your bigger financial plan, not just a number you shop for. Here is how to prepare in today’s market:
- Stay close to the data. Jobs and inflation reports are driving rates more than Fed announcements.
- Run the numbers. A refinance or purchase at today’s lower rates could free up cash flow or improve affordability.
- Work with a trusted guide. The mortgage market can shift quickly, and having a strategy in place will help you act with confidence.
Bottom Line
Mortgage rates are falling because the economy is cooling, not because of a Fed announcement. For homebuyers and homeowners, this could be the window to act. A well-timed mortgage strategy can improve your financial stability and help you take advantage of today’s changing market.
Ready to explore your options? Let’s look at the numbers and find the right path for you.
* Information about average mortgage rates referenced in this post was sourced from Mortgage News Daily as of Sept. 12, 2025. Rates may vary by borrower and are subject to change without notice. **Refinancing may cause your finance charges to be higher over the life of the loan. All loans are subject to credit approval, terms, and conditions.
