Mortgage Rates Hit Rock Bottom: What This Means for Job Seekers in Australia

Weekly Mortgage Rates Plunge After Disappointing Jobs Report

In a surprising turn of events, mortgage rates have dropped to their lowest levels since March, primarily due to weaker-than-expected job growth this summer. The 30-year fixed-rate mortgage averaged 6.7% in the week ending Aug. 7, down from 6.87% the previous week. This marks the lowest average rate since mid-March.

A Lousy Jobs Report Shakes the Market

The downturn in rates began following the release of July's employment report, which revealed the economy added only 73,000 jobs—far fewer than economists had predicted. Additionally, job growth estimates for May and June were revised downward by a staggering 258,000 jobs combined. This unexpected news left investors as disappointed as a child receiving pencils instead of a coveted toy.

Kara Ng, senior economist for Zillow, noted, “Friday’s disappointing jobs report drove the sharp fall in mortgage rates, as investors now anticipate slower growth and an earlier Fed rate‐cut cycle.”

Federal Reserve to the Rescue?

Investors are now betting that the Federal Reserve will cut short-term interest rates at its next meeting in September. Prior to the jobs report, the likelihood of a rate cut was seen as less than 50%. The Fed, tasked with balancing unemployment and inflation, appears to be shifting its focus toward combating rising unemployment.

Odeta Kushi, deputy chief economist for First American, explained, “Since mortgage rates tend to move ahead of Fed actions, they’ve been falling in anticipation. If confidence builds around a September rate cut, we could see rates continue to trend downward in the near term.”

Will Lower Rates Boost the Housing Market?

While the drop in rates might entice some prospective homebuyers, Kara Ng believes it’s unlikely to revive the sluggish home-buying season significantly. “This dip likely won’t be enough to salvage the sluggish home buying season,” she said. “Lower rates may tempt a few prospective home buyers off of the fence, but a dip of this size isn’t likely to make a notable difference.”

However, Mike Chadwick, president of Fiscal Wisdom Wealth Management, predicts that if the economy slips into a recession, both mortgage rates and property values could decline—a rare combination that might benefit first-time homebuyers. Yet, this scenario would likely come with higher unemployment rates, dampening overall market activity.