For Homeowners Waiting To Refinance, This Could Be Ready-Set-Go Time

A dour jobs report issued Friday by the U.S. Department of Labor (DOL) quickly sent ripples into the mortgage market, as CNBC reported that 30-year fixed rates pitched down in their “biggest one-day drop” in more than a year to an average of 6.29%. And that’s after Freddie Mac said that the same average rate had “tumbled” to 6.50% as of yesterday. 

DOL’s report this morning detailed that U.S. employers added 22,000 nonfarm jobs in August, more than 70% below economists’ expectations of 75,000. At the same time, the unemployment rate rose to 4.3%, the highest level since October 2021.

“The underwhelming jobs report reinforces the picture of a labor market that’s losing momentum without collapsing,” First American Financial Corporation Senior Economist Sam Williamson assessed. “The three-month average now stands at 29,000, a clear slowdown from earlier in the year.”

Though there might be a slowdown in job growth, with mortgage rates now at an 11-month low, savvy homeowners watching for rate drops have already been striking at the chance to refinance — even as purchase applications have remained sluggish. 

“As rates continue to drop, the number of homeowners who have the opportunity to refinance is expanding,” said Sam Khater, Freddie Mac’s chief economist. “The share of market mortgage applications that were for a refinance [have] reached nearly 47%” — tying a high-water mark last seen in October 2024. 

Further Push For The Fed

Meanwhile, Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, suggested the latest jobs report should give the Federal Reserve Board’s Federal Open Market Committee (FOMC) ample reason to cut the Fed’s interest rates for the first time this year. 

While it’s not a direct correlation and there are other factors at play, lower interest rates at the Fed will likely have a downstream effect on mortgage rates, potentially pushing rates lower still. The Fed’s rates have stood at 4.25%-4.50% since Dec. 19, 2024, now nearly nine months ago. 

“The slowdown in the job market should be more than enough for the FOMC to cut its short-term rate target at its September meeting, as this is not a picture of an economy at 'maximum employment,'” contended Fratantoni, “and the greater risk now appears to be that the job market will slip further in the months ahead.”

Bill Banfield, chief business officer at Rocket Companies, analyzed Friday’s market moves and underscored that now could be the time to jump on refi as well as home purchase opportunities. 

“Mortgage rates dropped to new 2025 lows today after a weaker-than expected August jobs report pushed the 10-year Treasury yield — the key benchmark for mortgage pricing — to its lowest level since April,” he said.  

“It’s important to note that homeowners who are waiting for the Fed to cut rates to refinance can act now,” he added. “Investors are already pricing in a September 17 Fed rate cut to lower rates.”   

“Today’s drop in mortgage rates matters,” Banfield noted. “Even a modest shift in rates can save homeowners tens of thousands of dollars over the life of a loan, while giving buyers more purchasing power.”