Mixed Jobs Data, Cheaper Oil - What it Means for Mortgage Rates!

Weekly Mortgage Market Update

Author

Michael Cassano
February 10, 2025

It’s been a busy week in the real estate and mortgage world, with mixed jobs data and a surprising dip in oil prices both making headlines.

Let’s dive in and see what all of this might mean for you and your business!

Read time: ~3 minutes

Rates ended FLAT compared to last week, and volatility was HIGH. Rates are in the low 7’s for most loan types without paying discount points. Paying discount points can get you in the mid to high 6’s.

Jobs Data Sending Mixed Signals

It’s been a rollercoaster for employment numbers this past week. On Tuesday, the JOLTS report showed a substantial 556,000 drop from the last report, tumbling from 8.156 million to 7.6 million openings—the steepest decline since October 2023.

The next day, ADP reported 183,000 new jobs, all in service-providing roles, beating the 176,000 forecast.

Then Friday’s BLS report came up short at 143,000 new jobs (vs. 169,000 predicted), though the unemployment rate dipped to 4.0% for the second consecutive month. Meanwhile, November and December got revised up by a total of 100,000 jobs.

While mortgage rates looked better earlier in the week, they gave back those gains on Friday

Key Takeaway: These mixed signals give the Fed little reason to lower rates in the near term, making a March pause likely. If we do see cuts in late 2025, it’ll probably be because of repeated weak jobs data or persistently low inflation. As of Sunday, there’s only a 50% chance of one or two cuts in 2025—a probability that keeps dwindling.

Cheaper Oil, Cheaper Mortgages? 🛢️ Here’s Why

Over the past month, oil prices have taken a noticeable dip, and if you’re in the housing industry, this could be a big deal. Lower oil prices can lead to reduced costs everywhere—from gas pumps to the production of everyday goods—ultimately slowing inflation.

Why should you care? Slower inflation typically makes long-term bonds more appealing, since investors don’t need sky-high interest rates to guard against rising prices. Plus, a calmer inflation outlook means the Fed is less likely to hike short-term rates, which often pulls down yields on long-term bonds (and, in turn, mortgage rates).

On top of that, when inflation stays subdued, investor confidence tends to climb. As more people buy long-term bonds, the Treasury doesn’t have to offer high interest rates to attract buyers, pushing yields lower and usually bringing mortgage rates down with them.

If the president and the Treasury really want to nudge mortgage rates lower without waiting on the Fed, reducing oil prices might be their most effective move.

It's CPI Week! 📅

The first reading of 2025’s CPI is due this Wednesday, and there is a good chance that we see inflation pull back over the next few months. Why? Over the next three months, we’ll be replacing some notably high inflation numbers from 2024, which should bring the annual figure down.

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