Market Update: Mortgage Rates and Labor Market Hold Steady

Blog posted On February 10, 2025

Mortgage rates have been relatively unchanged over the past couple of weeks. This may come as a surprise with all of the executive orders and talk about tariffs, but we’ll get to that later. For now, rates are holding steady and trending at lower level than the same time last month.

Key labor market data makes minimal impact

Typically, the market is extra charged when jobs data is released. Reports that indicate a stronger jobs market tend to push rates higher while reports indicating a weaker jobs market tend to push rates lower. Friday told a different story. On Friday, the collection of reports known as the ‘employment situation’ was released. It was kind of a mixed bag. Nonfarm payrolls (the number of non-farm related jobs added to the market) were lower than expected. The market would typically take this as a sign of job market weakness (lower rates). However, other data like the unemployment rate and average hourly earnings came in better than expected (higher rates). The media really clung on to the average hourly earnings number rising by 0.5% month-over-month, so rates inched up – but the change was so small that it didn’t bring rates higher than they were last week.

• Takeaway:  While the labor market does show signs of softening, it’s been resilient. So, if you’re waiting for a big plummet in jobs (and consequently rates), you might be disappointed.

…but what about tariffs and inflation?

There was a lot of talk about the potential tariffs a couple weeks ago and how they might affect rates, if implemented. Everything is a ‘what if’ at this point. The tariff implementation has been put on hold while the government works with other countries to tighten border protection to prevent (or lessen) drug trafficking. However, should the tariffs go through. Lumber costs could go up because we get a lot of it from Canada. People are also thinking it could drive up inflation and hurt the economy, which could cause rates to trend lower. Despite all the talk, rates have been calm, cool, and collected. As Matthew Graham of Mortgage News Daily writes, “it's plain to see that rates continue to favor reacting to economic data rather than news headlines.”

• Takeaway: No need to worry just yet. Tariff implementation has been delayed/put on hold.

Coming up this week

We’ve got the consumer price index (CPI) coming out on Wednesday, which should give us an update on inflation levels. Higher-than-expected numbers = not great for rates. Lower than expected numbers = good for rates.

If you’re wondering if you should be waiting it out or not, let us know, we’d be hapy to talk things through with you in relation to the market!

Sources: Mortgage News Daily, MBS Highway