I feel like I haven’t written a word about mortgage rates since the government shutdown began.
Part of that is because once the government closed shop, we stopped receiving key economic data.
And without any new data, mortgage rates were kind of stuck. The good news is they were stuck near three-year lows.
But now that the shutdown is over, it’s time to start paying attention again.
This Thursday we’ve got what could be a big market mover in the delayed jobs report from September.
Watch Out for a Big Mortgage Rate Move on Thursday
Mark your calendars for this Thursday morning when the Bureau of Labor Statistics (BLS) releases the much-anticipated and much-delayed September jobs report.
It’s typically released on the first Friday of the month, but thanks to the government shutdown, it got pushed back quite a bit.
Now we’re going to get the key report on a Thursday, exactly one week before Thanksgiving.
Kind of strange, but given the massive delay and lack of other data lately, it’s going to be an important one.
This is especially true since labor has been top of mind lately for both the Fed, economists, and the bond market.
If the report comes in cold again, as it has been lately, there could be a rush to bonds, which would increase bond prices and lower corresponding bond yields.
That would be good news for mortgage rates, which as I’ve said have been stuck for over a month thanks to the shutdown that began on October 1st.
Mortgage Rates Came Full Circle During the Shutdown
The 30-year fixed did come down in the middle of the shutdown, but basically came full circle since it began, as seen in this chart from MND.
Historically, mortgage rates tend to fall during shutdowns, which they did, but they popped back up after the Fed cut its own rate.
That too seems to be a thing, as whenever the Fed cuts, mortgage rates seem to bounce higher.
It might boil down to a sell the news thing where everyone knows the Fed is going to cut, bakes it into rates, then once they cut, we see a little reversal.
But it was also driven by words from Fed Chair Jerome Powell, who indicated that future cuts, including one in December, weren’t a sure thing.
Will Another Fed Cut in December Derail Mortgage Rates Again?
The chances of that cut will likely be driven in some part by this jobs report, which seems to be one of the bigger pieces of data that was delayed.
We’ve been told the October jobs report may never be released, though we might get the November jobs report in early December before the next Fed meeting on the 10th.
As it stands now, the chance of another quarter-point cut in December is just 41%, per CME, down markedly from a month ago when it was 94%.
So there are certainly some headwinds and with lots of unknowns regarding data releases, mortgage lenders might be defensive with pricing.
However, if we get more ugly jobs reports between now and then, along with cooler-than-expected CPI, or simply neutral inflation data, mortgage rates could rally lower and push below 6%.
I’ve long thought a sub-6% 30-year fixed mortgage rate was possible by the fourth quarter of 2025.
And while we’re running out of time, we’ve still got another 45 days or so to make it happen!
It wouldn’t be a huge surprise given the 30-year is already priced at 6.375%, meaning it doesn’t have much more ground to make up.
Rates have already come down about one full percentage point since January, so it’s safe to say 2025 has actually been a good year for mortgage rates.
Read on: 2025 Mortgage Rate Predictions
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