Mortgage Rates Ease as Labor Market Weakens and Fed Signals Openness to December Cut
Mortgage rates ticked lower this week, fueled by fresh evidence that the U.S. job market is losing momentum and increasing confidence that the Federal Reserve will cut rates at its December meeting.
The average 30-year fixed mortgage rate slipped to 6.23%, down from 6.26% a week ago, according to Freddie Mac. The 15-year mortgage rate also inched down to 5.51%.
The move closely followed the drop in the 10-year Treasury yield, which mortgage rates typically shadow. Treasury yields have been sliding as more Fed officials openly signal support for easing policy next month.
In just the past few days:
- New York Fed President John Williams,
- San Francisco Fed President Mary Daly, and
- Fed Governor Christopher Waller
have all indicated they’d back another rate cut if economic data continues to cool.
Labor Market Losing Steam
New job data gave markets more reason to believe a December cut is coming.
According to ADP, private-sector job losses accelerated this month — another sign that the labor market is weakening faster than expected. That shift puts additional pressure on the Fed to prevent a harder-than-intended slowdown.
Traders now assign an 83% probability of a 25-basis-point cut at the Fed’s Dec. 9–10 meeting, per CME FedWatch.
Rate expectations also moved after Bloomberg reported that Kevin Hassett, director of the National Economic Council and an ally of lower-rate policy, is a frontrunner to replace Jerome Powell as the next Fed Chair.
Housing Market Seeing Signs of Life
Mortgage rates have hovered at 6.2% to 6.3% for much of the fall — near year-to-date lows — and buyers are responding:
- Pending home sales rose 1.9% in October,
- Home-purchase mortgage applications jumped 8% through Friday versus the prior week.
Lower borrowing costs are encouraging more sidelined buyers to re-enter the market, especially as affordability remains one of the biggest structural constraints in U.S. housing.
WSA Take
Falling mortgage rates are giving the housing market its first real tailwind in months — but the deeper story is macro. A softening labor market and a wave of dovish Fed commentary are reshaping expectations across all risk assets. If the Fed follows through with a December cut, housing could be one of the first sectors to re-accelerate into 2025.
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