Falling job growth may be bad news for the economy, but it could bring welcome news for mortgage borrowers. A weaker-than-expected jobs report has already pushed rates lower, easing some of the pressure on today’s housing market.
For homebuyers, the shift offers a chance to secure a mortgage at a more affordable level than what we’ve seen in recent months. Lower borrowing costs can translate into smaller monthly payments and, in some cases, the ability to consider a wider range of homes.
Homeowners who purchased when rates were higher may also see an opening to refinance. A lower rate can cut monthly expenses or help shorten a loan term, giving borrowers more flexibility as they manage their finances.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Dipping mortgage rates are promising for buyers
After years of mortgage rates hovering at or above 7%, there’s finally relief in sight for homebuyers. According to Mortgage News Daily data, average rates for a 30-year fixed mortgage dropped to 6.28% on Monday, September 8 — down from 6.53% just a week earlier.
It’s a welcome shift for both buyers and homeowners looking to refinance. Rates had climbed as high as 7.26% in January and 7.08% in May, so the recent drop could mean lower monthly payments and make homeownership more affordable.
How the jobs report lowered mortgage rates
On Friday, the Bureau of Labor Statistics released its jobs report for August with disappointing results. The unemployment rate increased to 4.3%, compared to 4.2% in July. Employers added just 22,000 jobs in August, indicating a slowdown in the labor market.
There are many potential reasons for the poor jobs report, including economic uncertainty generated by tariffs. The back-and-forth nature of the tariffs make it difficult for businesses to strategically plan, so businesses may be less likely to hire.
Additionally, inflation results in higher prices, and consumers are starting to limit their spending, impacting business profits and potentially resulting in staffing cuts.
Though the jobs report indicates trouble for the economy, it correlates with declining mortgage rates, and it could help lower interest rates even further.
Cutting interest rates can help boost the job market, making operational costs cheaper for businesses, but increasing interest rates helps fight inflation. Given the poor jobs report, the Fed might decide to lower interest rates to help boost employment, which could drop mortgage interest rates even more.
The perks of lower mortgage rates for homeowners and buyers
Lower mortgage rates could make it easier and more affordable for buyers to purchase homes, and that could mean that sellers receive more offers on their homes. Lower mortgage rates could prompt more buyers to enter the market, driving sales and increasing demand.
Homeowners may also choose to refinance a mortgage to take advantage of the current lower interest rates. Refinancing at a lower interest rate can lower your monthly payments by reducing the total interest you’ll pay.
If you’re struggling to make payments, you might choose to extend your loan term when you refinance. Alternatively, if you want to pay off your mortgage faster, you could refinance to take advantage of a lower interest rate while choosing a shorter loan term to pay off your loan sooner.
Just keep in mind that you'll pay a fee to refinance your home, and that can vary depending on the type of refinancing you choose and your new loan amount.
Explore and compare some of today's top refinance offers with the tool below, powered by Bankrate:
Additional ways to get lower mortgage rates
While mortgage rates may be falling, the actual interest rate you receive depends on several factors. You can take steps to maximize your chances of getting the lowest interest rate possible:
- Build your credit score. Lenders review your credit score and offer lower interest to borrowers with higher credit scores. Focus on making all of your payments on time to improve your credit score.
- Make a larger down payment. Lenders assume less risk when you make a large down payment, so they may offer you a lower interest rate. Plus, making a large down payment reduces your monthly mortgage payments and means you’ll pay less interest over the life of your mortgage.
- Reduce your debt-to-income ratio. A lender will also review the amount of existing debt you have compared to your income. If you have lots of debt, it can indicate that you’re at a higher risk of not being able to pay your mortgage, so lenders may charge you a higher interest rate to make up for some of that risk. Focus on paying off debts and working to increase your income.
If you’re ready to buy a home, take time to consider how much mortgage you can comfortably afford and get pre-approved so you’re prepared to make an offer when the right property comes along.
Related Content
-
5 Multibagger Stocks With Amazing Returns in 2025multibagger stocks Big change catalyzed by top tech disruptors often leads to big growth.
-
The Seven Best-Paying Side Gigs For RetireesIf you're worried you won't have enough saved for a comfortable retirement, or that life after work will be boring, these well-paid roles could be the answer.
-
I'm a Real Estate Investing Expert: Optional 721 UPREIT DSTs Can Be the Best of Both WorldsBefore investing in any 721 UPREIT exchange, look for one that offers a straightforward, investor-friendly exit.
-
I'm a Real Estate Investing Pro: This Is What Investors Should Know About Truck Stop InvestmentsTruck stops might seem like good investments, but they can actually be a risky gamble due to unstable fuel prices, unreliable operators and coming changes in transportation. Instead, consider safer options like industrial or residential properties.
-
I'm 57 With $4.1 Million and Plan to Retire Abroad in a Few Years. Can I Stop Contributing to My 401(k)?We ask financial experts for advice.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
Can You Afford a Million-Dollar Home on a $250,000 Salary?It’s more than the sticker price — mortgage rates, down payments, taxes and debt all factor into whether a million-dollar home fits your budget.
-
Why a Landmark Real Estate Commission Settlement Hasn’t Lowered Costs for HomebuyersThe 2024 NAR settlement promised commission transparency and negotiation —but one year later, average fees remain unchanged. See why change has been slow and what it means for homebuyers and sellers.
-
I'm 65 and My Property Taxes and Insurance Keep Going Up. How Can I Afford My House in Five Years?The costs of homeownership may continue to rise in retirement. Here's how to manage that.
-
The Risks of Forced DST-to-UPREIT Conversions, From a Real Estate ExpertSome new Delaware statutory trust offerings are forcing investors into 721 UPREIT conversions at the end of the hold period, raising concerns about loss of control, limited liquidity, opaque valuations and unexpected tax liabilities.
