Washington, DC – Mortgage rates have surged to new 2025 lows following the release of a disappointing August jobs report, which showed the U.S. economy added only 22,000 nonfarm payroll jobs, significantly below the Dow Jones estimate of 100,000. The report, released by the Bureau of Labor Statistics on September 5, 2025, has intensified expectations of a Federal Reserve rate cut, driving a rally in bond markets and pushing mortgage rates down further.
According to industry sources, the average 30-year fixed mortgage rate fell to 6.39% on September 4, 2025, down 0.07% from the previous day, marking the lowest level since October 3, 2024. The 15-year fixed rate dropped to 5.33%, while 30-year FHA and VA loans saw rates decline to 5.69% and 5.79%, respectively. This sharp decline follows a trend of softening labor market data, with the July jobs report previously revised downward by 258,000 jobs, signaling economic weakness.
The August report’s dismal figures, coupled with an unemployment rate rising to 4.2%, have bolstered market confidence in a Federal Reserve rate cut at its September 17, 2025, meeting, with the CME FedWatch tool estimating a 99.4% probability of a quarter-point cut. Analysts note that weak labor data, including a job openings report showing more unemployed workers than available jobs, has lowered the 10-year Treasury yield to 4.26%, further easing pressure on mortgage rates.
“This morning’s jobs report delivered for those hoping for lower mortgage rates,” said Colin Robertson, a mortgage analyst at The Truth About Mortgage. “While it’s bad news for the economy, it’s fueling optimism for homebuyers and homeowners looking to refinance.” The drop in rates has already spurred a surge in refinance applications, which now account for nearly 47% of mortgage applications, the highest since October 2024.
However, experts caution that the rally could be short-lived. “A surprisingly strong jobs report could push rates back up,” said Sam Khater, Freddie Mac’s chief economist. “The market’s reaction depends on the magnitude of economic surprises.” If upcoming data indicates economic resilience, rates could climb, potentially offsetting recent declines.
The housing market, already strained by high prices and affordability challenges, may see increased activity as rates near 6%, a threshold that historically boosts buyer demand. Logan Mohtashami, lead analyst at HousingWire, noted, “At 6%, we could see a significant surge in home sales, as we did in 2022.” Yet, with inventory up 15.4% year-over-year and home prices declining for four consecutive months, the market remains in a delicate balance.
As the Federal Reserve’s next meeting approaches, all eyes are on whether further economic softening will sustain the mortgage rate rally or if unexpected strength could reverse the trend. For now, homebuyers and refinancers are seizing the opportunity presented by these 2025 lows.
Sources: Mortgage News Daily, The Truth About Mortgage, Mortgage Research, HousingWire, Freddie Mac, Realtor.com, AP