Mortgage rates tumbled on Friday to their lowest since April 2023 after a weak jobs report sent bond yields sharply lower and boosted Wall Street’s expectations for a rate cut from the Federal Reserve at its September meeting.

The average rate for a 30-year fixed mortgage dropped 0.22 percentage points to 6.4%, according to Mortgage News Daily. That’s the lowest average rate for the most commonly held home loan since April 2023, according to data from Freddie Mac. 

On Friday morning, the Labor Department reported that hiring abruptly slowed in July, with employers adding far fewer jobs than economists had expected, while the unemployment rate jumped to its highest point since late 2021. The significant miss sent stocks tumbling as well as yields on the 10-year U.S. Treasury, which mortgage rates closely follow. 

The sharp decline in mortgage rates could offer some relief to house hunters, as many have been priced out of the market given the double whammy of high borrowing costs and home prices that reached a record in June. Mortgage rates could fall even lower in the coming weeks, said NAR Chief Economist Lawrence Yun in an emailed statement. 

Yun pointed to a 1-percentage-point decline in the 10-year bond yield, which dropped to 3.8% on Friday from 4.8% a few months ago. If mortgage rates fell by the same amount, borrowers would need $300 less for the monthly payment on a typical home loan, he said. 

“Homebuyers who were priced out a few months ago should re-check whether they can enter the homebuying market if they have secure jobs,” he added. 

Meanwhile, economists are now suggesting the Federal Reserve may need to cut rates more deeply than had been expected given the slowing labor market. Some Wall Street economists on Friday predicted the Fed could cut its benchmark rate by 0.5 percentage points at its September meeting, compared with prior forecasts for a 0.25 percentage point cut. 

On Wednesday, the Fed held its benchmark interest rate steady, as expected, but Chair Jerome Powell signaled the central bank could begin cutting borrowing costs in September so long as inflation continues to abate. But he also flagged that Fed officials are closely watching the labor market for signs of weakness, which he said could indicate the need for cuts. 

Given the weaker-than-expected jobs numbers on Friday, Wall Street analysts are now predicting several additional rate cuts throughout 2024, as well as potentially deeper reductions than earlier forecast.

“We now expect 25 bp cuts at each of the remaining three meetings this year and will be watching for signs that a larger 50 bp move could be on the cards, although that would be dependent on the economy and labour market weakening at a faster pace than we forecast,” Capital Economics said in a Friday report.