Struggling workers face setbacks, while borrowers find relief in mortgages

The upcoming Federal Reserve meeting on September 16-17, 2025, has sparked much debate among economists. While some anticipate a rate cut, others remain uncertain.

The current average rate on a 30-year mortgage stands at 6.55 percent, according to Bankrate's national survey. However, recent economic indicators suggest a potential shift. Job growth has slowed, with job openings declining, creating a drag on economic activity.

The U.S. economy created few jobs in August, with nonfarm payrolls increasing by just 22,000. This sluggish job growth is coupled with a rise in the jobless rate, which moved up to 4.3 percent. Employment also declined in June.

Despite the slowing job market, inflation remains a concern. It is still running above the Fed's 2 percent target, arguing against a trim to the federal funds rate. However, a 25 basis point interest rate cut is highly expected, with about a 75-90% probability according to market assessments.

The tepid jobs report and the weakening labor market seem to have influenced the market's expectations. The 10-year Treasury yield, a key benchmark for mortgage pricing, has reached its lowest level since April. As a result, mortgage rates might fall.

Bill Banfield, chief business officer at Rocket Mortgage, confirmed this trend, stating that mortgage rates dropped to new 2025 lows. However, the final decision rests with the Federal Reserve, and economists will be closely watching the September meeting for any rate adjustments.

In conclusion, the jobs report for August has raised concerns about the state of the U.S. economy. While inflation remains a challenge, the weakening labor market and the subsequent drop in mortgage rates have created a complex picture for the Federal Reserve's decision-making process. Regardless of the outcome, the September meeting promises to be a significant event in the world of economics.