The market has already priced in the 25bp Fed cut, with the 10-year Treasury yield dropping about 30bp since Powell first hinted at a cut back on August 22.

Mortgage rates move closely with the 10-year Treasury yield because most borrowers keep their loans only 7–10 years, not the full 30. On average, mortgage rates run about 1.5%–2% higher than the 10-year. That extra gap, called the spread, reflects risk and investor demand.

In simple terms: if the 10-year yield rises, mortgage rates rise; if it falls, mortgage rates fall.

Example: A 10-year yield of 4% typically means mortgage rates around 6%.

Job Market overview:

At first glance, fewer hirings matched with fewer job seekers might look like a breakeven but that would not be correct. Without enough demand to absorb those who are laid off, the unemployment rate can climb quickly.

It’s Complicated but bottom line, mortgage rates should continue to decline.

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