Mortgage rates have plunged to their lowest daily level since fall 2024, driven by a surprisingly weak August jobs report. According to Mortgage News Daily, the average rate for a 30-year fixed mortgage dropped to 6.29% on Friday, a significant decrease from the 6.45% recorded the day before. This rate mirrors those seen in the autumn of last year, marking a pivotal moment for prospective homebuyers and the broader housing market. Remarkably, this is the first time mortgage rates have dipped below 6% since September 2022, as confirmed by Freddie Mac data. The latest jobs report, revealing only 22,000 jobs added in August – a stark contrast to economists' anticipated 75,000 – triggered a reassessment of the economic landscape and fueled a shift in investor sentiment. The unemployment rate climbed to 4.3%, the highest in nearly four years, further reinforcing concerns about the labor market’s health. Furthermore, wages increased by a modest 0.3% month-over-month (3.7% year-over-year), representing the slowest annual wage growth since July 2024. This combination of factors prompted investors to purchase bonds, a move that directly impacted bond prices. When investors buy bonds, the price of those bonds increases, and consequently, mortgage rates tend to decrease.

Matt Graham, COO of Mortgage News Daily, highlighted this dynamic in a post on X, noting that "many lenders are priced better than 10/3/24 at rates of 6.125%, and many lenders will be quoting in the high 5's today." The immediate reaction to the jobs report was evident in the stock market, with the S&P 500 and Nasdaq surging to record highs, driven by renewed optimism regarding potential September interest rate cuts. Treasury yields also experienced a sharp decline, with the two-year yield falling toward 3.5 to 3.6%, the lowest level in several years. This downward pressure on yields further contributed to the decline in mortgage rates. The dollar weakened against other currencies, reflecting a broader shift in market sentiment.

Major market indices, including the Dow Jones Industrial Average, S&P 500, and Nasdaq, experienced declines after market close on Friday, showcasing the market’s reaction to the economic data. Shannon Carroll contributed to this article.