Market Update: Job Market Weakens; Rates Plummet to Lowest Levels in 11 Months. Here’s What it Means for You

Blog posted On September 10, 2025

As Summer draws to a close, mortgage rates are beginning to feel the chill of Fall. Rates kicked off September by dropping to the lowest levels in nearly a year. The cause? Employment data is showing significant signs of a weakening job market, which typically signifies an economic slowdown. A bad economy coincides with a stronger bond market which leads to lower mortgage rates. So as the weather and the economy continue cooling down, mortgage rates offer the silver lining of hope for homeowners and home buyers alike.

Why Mortgage Rates Are Falling

Mortgage rates are closely tied to the health of the U.S. economy. When hiring slows and unemployment rises, investors often shift their money from riskier assets (like stocks) to safer ones (like bonds). That demand strengthens the bond market, which in turn pushes mortgage rates down.

In short: weaker job market = lower mortgage rates.

Mortgage Demand is Surging

Mortgage rates have trended significantly lower over the past two weeks, dropping to the lowest levels since October 2024. “The downward rate movement spurred the strongest week of borrower demand since 2022, with both purchase and refinance applications moving higher,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications increased to the highest level since July and continued to run more than 20 percent ahead of last year’s pace.” The Refinance Index had the strongest week in over a year, and average loan size for refinances increased (since borrowers with larger loans are more sensitive to rate moves. There were also more people applying for Adjustable-Rate Mortgages last week since those rates are trending lower than the 30-year fixed rate.

What’s Coming Up Next

The market is now watching two major events in the next week:

• Consumer Price Index (CPI) report this week. Inflation data always matters for rates, but right now it’s taking a back seat to jobs data. That’s because the Federal Reserve is most concerned with economic stability, and the slowdown in hiring is sending stronger signals than inflation numbers at the moment.
• Federal Reserve interest rate decision next week. The Fed is widely expected to cut its benchmark interest rate. While Fed cuts don’t directly change mortgage rates, they influence the overall cost of borrowing and often reinforce market trends. If a cut happens, it could add more downward pressure on rates.

What This Means for Home Buyers

• More affordability. Even a small rate drop can significantly lower your monthly mortgage payment. Right now, as previously mentioned, rates are at the lowest levels this year. Not ready to buy just yet? You can still lock in your rate and lower it once if rates continuing falling.
• Greater buying power. Lower rates mean you may qualify for a larger loan without stretching your budget. If you’re ready to buy now but worried rates might fall more, you can ask us about Rate Rebound, which lets you buy now and refinance later with no lender fees to take advantage of lower rates (if they fall more).
• More competition. If rates continue to fall, more buyers may re-enter the market, which could heat things up again.

What This Means for Homeowners

• Refinance opportunities*. If you bought or refinanced when rates were higher, now may be the time to explore lowering your rate.
• Debt consolidation. Tapping into home equity with today’s lower rates can help homeowners manage high-interest debt more affordably.
• Renovation potential. Lower rates make financing upgrades—whether through a cash-out refinance or a renovation loan—more attractive.

What This Means for Real Estate Agents

• More motivated buyers. Clients who were previously priced out may be ready to re-engage.
• Listing opportunities. Sellers who were “locked in” by higher rates may consider moving if they can secure a better mortgage.
• Strategic advantage. Sharing rate trends with clients positions you as a trusted resource during market shifts.

The Bottom Line

With mortgage rates at their lowest levels in nearly a year, and with the Fed expected to cut rates next week, now is a unique moment of opportunity. Whether you’re considering buying, refinancing, or simply exploring your options, it’s a good time to check in on your numbers and see how the shifting market could work in your favor.

Sources: Bloomberg, Mortgage Bankers Association, Mortgage News Daily,

* By refinancing the existing loan, the total finance charges may be higher over the life of the loan