By Rob Sabo

Mortgage rates fell to an 11-month low this week. With the August nonfarm report showing weakness in the jobs sector and a slight uptick in unemployment, homebuyers could see even lower rates ahead.

Rates for a 30-year fixed mortgage dipped to 6.5 percent, well below the January high of 7.04 percent, mortgage lender Freddie Mac reported on Sept. 4 in its latest primary mortgage market survey. Rates for a 15-year fixed mortgage also tumbled to 5.6 percent, off their January high of 6.27 percent.

Sam Khater, chief economist for Freddie Mac, said falling rates can lead to increased optimism for potential homebuyers and sellers.

“As rates continue to drop, the number of homeowners who have the opportunity to refinance is expanding,” Khater said in a statement.

“In fact, the share of market mortgage applications that were for a refinance reached nearly 47%, the highest since October.”

Freddie Mac’s survey focuses on conventional mortgages for borrowers who put at least 20 percent equity as a down payment and have sterling credit ratings.

Mortgage rates are directly tied to Treasury yields since they are calculated by adding a spread to 10-year Treasury notes, Freddie Mac said. When Treasury yields slide, mortgage rates follow suit.

With the unemployment rate ticking up to 4.3 percent in August—the highest level since October 2021—and a weak report of just 22,000 new jobs added in the month, mortgage rates are expected to continue their downward slide, economists say.

Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, said all signs point to an interest rate cut when the Federal Open Market Committee (FOMC) meets later this month.

“Job growth slowed to just 22,000 in August and estimates for the prior two months were revised down by 21,000,” Fratantoni said in an analysis note. “The job market is softening. … Job losses continued in the federal government and manufacturing sectors.”

The slowdown “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,’” he continued.

The weak jobs report all but ensures that the Fed will cut interest rates by 25 basis points at the upcoming meeting on Sept. 17, online real estate brokerage Redfin said on Sept. 5. Any downward movement on federal benchmark interest rates later this month won’t likely lead to steep declines in mortgage rates since projected basis cuts are already priced into today’s mortgage rates, Redfin said.

“My message to homebuyers and refinancers: This is what you’ve been waiting for,” said Chen Zhao, head of economics research at Redfin, in a statement. “If you’re serious about locking in a mortgage rate, do it now. The mortgage market is already pricing in the Fed’s expected interest-rate cut, and rates are unlikely to fall more.”

Home borrowing costs are projected to remain high throughout the year and beyond. Fannie Mae’s economic and strategic research group earlier this year projected mortgage rates to end 2025 at 6.3 percent and fall to 6.2 percent by the end of 2026.