The average contract rate on the 30-year fixed mortgage inched up by nearly half a percentage point following the release of the government's monthly jobs report.
As of Oct. 4, the contract rate for the 30-year fixed mortgage was 6.53%, according to Mortgage News Daily. The mortgage rate from Oct. 3 was 6.26%, 27 basis points lower. It was one of the largest single-day mortgage rate jumps recorded.
The contract rate for the same loan term was 6.11% on Sept. 17, the day before the Federal Reserve cut its benchmark rate by 50 basis points.
In addition to the 30-year fixed term, the rate for the 15-year mortgage rate also rose to 5.88% from 5.63% on Sept. 17.
It is important to note that the Feds' interest rate does not directly influence mortgage rates. However, it affects the overall cost of borrowing and bond yield, which are more directly tied to mortgage rates.
READ ALSO : Fed Cuts Interest Rates Down to 4.8%; Here's What It Means for the Housing Market and Mortgages
How Could the Jobs Report Affect Future Rate Cuts?
The recent employment report could push the Feds to put a pause on cutting its benchmark rates to avoid possibly reaccelerating inflation.
A separate statement released by Mortgage Bankers Association's chief economist Michael Frantantoni warned that the jobs report would slow the pace of the Fed's cuts. He also expects mortgage rates to stay in the 6% range over the next year.
"This news will push mortgage rates to the top of that range, but we do expect that mortgage rates will stay close to 6% over the next 12 months," the statement read.
Is the Jobs Report To Blame?
Even before the employment report was published, mortgage giant Freddie Mac forecasted that while mortgage rates would decline further following the Feds' rate cuts, they would likely remain above 6% this year, per its outlook.
The mortgage giant also said the housing market would only improve more modestly but noted that the high rates would lead the lock-in effect to remain. This would then put more pressure on inventory, which is already struggling to meet the demand. The high home prices will keep sales "muted" through 2025.
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