I feel like I haven’t written a word about mortgage interest since the government shutdown began.
Part of that is because when the government shut up shop, we stopped receiving important economic data.
And with no new data, mortgage rates were kind of is stuck. The good news is that 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 have what could be a big market mover in the September delayed jobs report.
Watch for a big interest rate change on Thursday
Mark your calendars for this Thursday morning when the Bureau of Labor Statistics (BLS) releases the long-awaited and much-delayed September jobs report.
It is typically released on the first Friday of the month, but thanks to the government shutdown, it was pushed back quite a bit.
Now we get the key report on a Thursday, exactly one week before Thanksgiving.
Kind of weird, but given the massive lag and lack of other data lately, it becomes important.
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 out cold again, as it has been recently, there could be a rush for bonds, which will increase bond prices and lower bond yields accordingly.
That would be good news for mortgage rates, which as I said have been stuck for over a month thanks to the shutdown that began on October 1st.
Mortgage interest rates came full circle during the shutdown
The 30-year fix may have dropped in the middle of the shutdown, but has essentially come full circle since it began, as seen in this chart from MND.
Historically, mortgage rates tend to fall during foreclosures, which they did, but they rebounded after the Fed lowered its own rate.
That also seems to be a thing, since when the Fed cuts, mortgage rates seem to go higher.
It may boil down to selling the news, where everyone knows the Fed will cut, bakes it into rates, and once they cut, we see a small reversal.
But it was also driven by words from Fed Chairman Jerome Powell, who indicated that future cuts, including one in December, were not a sure thing.
Will the Fed cut rates again in December again?
The chances of that cut will likely be driven in part by this jobs report, which appears to be one of the bigger pieces of data that was delayed.
We have been told that the October jobs report will never be released, although we may 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 only 41% per CME, which is a significant decrease compared to a month ago, when it was 94%.
So there are definitely headwinds and with lots of unknowns regarding data releases, mortgage lenders can be defensive with pricing.
But if we get more nasty jobs reports between now and then, along with cooler-than-expected CPI or just neutral inflation data, mortgage rates could fall and push below 6%.
I have long believed that a 30-year fixed mortgage rate below 6% was possible by the fourth quarter of 2025.
And even though we’re running out of time, we still have 45 more days to make it happen!
That wouldn’t be a big surprise since the 30-year is already priced at 6.375%, meaning it doesn’t have much more ground to make up.
Interest rates have already fallen about a full percentage point since January, so it’s safe to say that 2025 has indeed been a good year for mortgage rates.