Tomorrow is a big day for mortgage rates, potentially.
I say that because tomorrow is the release of the monthly jobs report from the Bureau of Labor Statistics (BLS).
Known as the Employment Situation, it details how many jobs were added in the prior month, in this case February.
It also includes the unemployment rate, average hourly earnings (wage growth), and any revisions from prior months.
A month ago, the jobs report was a mixed bag, with jobs added below expectations, but a lower unemployment rate and higher wages.
Jobs Report Generally the Biggest Mortgage Rate Mover
Mortgage rates have the potential to move daily based on what’s happening in the world and in financial markets.
Generally, it is economic data that drives rates, but there are things like geopolitical events and lately, stuff like tariffs impacting mortgage rates.
The jobs report tends to be one of the biggest economic drivers of mortgage rates, so loan officers and mortgage brokers pay close attention.
They also may advise their clients to lock their mortgage rate before the report is released, given the uncertainty.
Ultimately, nobody really knows what will happen on the first Friday of the month, when the jobs report is released.
But they know it could be pretty impactful, so floating your mortgage rate before the release is often ill-advised if you expect to close your loan soon.
Chances are your LO or broker will tell you, “if you like it, lock it.”
Anyway, tomorrow will be really interesting because mortgage rates enjoyed a nice six weeks in a row of declines before finally plateauing this week.
Tariffs vs. Jobs Will Determine Where Mortgage Rates Go Next
Mortgage rates finally halted their six-week descent after President Trump announced new tariffs on Mexico, Canada, and China.
Of course, he basically reversed (paused) the tariffs on Mexico and Canada, while doubling the tariff on China.
That led to China saying it was ready for “a trade war or any other type of war,” which obviously has much bigger implications.
Meanwhile, as the rhetoric ratchets up, relationships between countries are getting strained, and businesses both big and small are probably having increased hesitations.
If you don’t know if the tariffs are real or not, it makes it difficult to plan for the future, especially when it comes to things like production and hiring.
It affects the housing market directly, with the cost of constructing a new home potentially rising $17,000 to $22,000.
And given it’s already out of reach for many prospective home buyers, this isn’t a positive development.
Long story short, it’s pretty clear that mortgage rates don’t like tariffs, and had they not resurfaced this week, the 30-year fixed may have continued falling.
Now we look to jobs for the next move.
Jobless Claims Fell Last Week, What Will the Jobs Report Say?
Mortgage rates also increased today because weekly jobless claims came in lower than forecast.
Of course, ADP reported Wednesday that only 77,000 private jobs were created in February, which was well below the 148,000 expected.
While one might think the BLS jobs report could sing a similar tune, you just never know.
Ultimately, the DOGE layoffs aren’t as big as their bark, and jobs added is still expected to be up quite a bit from January.
Remember, the January jobs report was impacted by “bad weather” and the California wildfires. It was a weird month in general all around.
So there might be a little too much optimism about this report coming in cold too, based mostly on what transpired very recently. It could in fact surprise everyone the other way.
And that’s why I said don’t be surprised if mortgage rates go up tomorrow. We might be getting ahead of ourselves on the longer-term outlook for employment.
In reality, the February jobs report could reflect a stronger-than-expected economy that “bounced back,” which has yet to feel the impact of recent government layoffs and slowing growth due to tariffs.
That could well be on the way, but it might not reflect in the data just yet.
So while I’m cautiously optimistic that mortgage rates will continue to come down this year, be vigilant in the short-term.
Read on: 2025 Mortgage Rate Predictions
