Why We Could Expect Mortgage Rates to Come Down – But Don’t Count on a Fast Drop

Yesterday, the Federal Reserve cut short-term interest rates by .25%, a move many had been expecting. But the bigger story came when Chairman Jerome Powell made it clear that the rate track ahead is not set in stone. He said:

"A further reduction of the policy rate at the December meeting is not a foregone conclusion, in fact, far from it." (Not quite what we wanted him to say!)

Markets interpreted that as a warning sign and reacted accordingly! Bond yields jumped, stocks fell, and the idea of an immediate rate decline faded somewhat.

Current backdrop and why we're watching jobs data:

We've been tracking an increase in layoff announcements from major companies, for example, Amazon is cutting 14,000 jobs, UPS will cut 48,000 jobs by the end of the year, and Microsoft announced around 9,000 layoffs last quarter. There are many other firms following suit. These aren’t yet signaling a full-blown collapse, but they point to stress in the labor market.

According to employment research firm Challenger, Gray & Christmas, nearly 946,426 job-cut announcements have been made in the U.S. so far in 2025, through approximately September. That number is meaningful. In past years, when job losses reached the 1 million mark or higher, mortgage rates tended to decline the following year.

Historical point of comparison:

• In 1982, over 1 million jobs were lost. The Fed’s high-rate policy choked off credit - businesses couldn't borrow, consumers delayed purchases, and homebuilding collapsed. The prime lending rate reached 21.5% in late 1981.During the 2008 - 2009 "Great Recession", the U.S. lost about 8.7 million jobs over those two years.
• In 2020, due to the COVID-19 shock, around 22 million jobs were lost.
• So far in 2025, we're not remotely near those levels job losses in the 800K to 1 million range are far smaller in scale (and still rising).
• Because of this, the case for a rapid drop in rates is weaker, and the labor-market weakness is present, but its magnitude is lower than in past episodes that triggered major rate cuts.

What this means for mortgage rates:

Here are approximate average 30-year fixed mortgage rate benchmarks at the start vs. two years later of major episodes:

1/1/2020 = 3.72% / 1/1/2022 = 3.11%

1/1/2008 = 6.07% / 1/1/2010 = 5.09%

1/1/1982 = 17.30% / 1/1/1984 = 13.43%

Note that rates stayed in the 9%+ range from the 1980’s to 1991. By analogy, just because the labor market shows signs of stress does not mean we will see a quick slide to lower rates.

Our forecast and strategy for the coming year:

• Because Powell emphasized that a December cut is far from guaranteed, the likelihood of immediate, deep mortgage-rate relief is modest.
• Given the size of job-loss announcements compared to past recessions, the economy appears weaker, but not to the same degree as in 2009 or 2020. That suggests a slower burn rather than a sudden collapse.
• As a result, mortgage rates may remain elevated for a while. We could see a modest easing, but a meaningful drop is likely to take 12-24 months rather than weeks.

Key considerations for clients:

• While we keep a "watchful minimum" mindset, do not assume that rates will revert to pre-pandemic or ultra-low levels.
• Keep an eye on the employment reports and inflation data. The combination will drive future rate moves.
• Knowledge is power, and being able to recite any of the above to a client who is on the fence will help you in helping them make the right decision!
• See above, and the same applies to your lender when they review rates and advise on next steps. We don’t control the markets, but having a lender who understands the markets and can explain them to your clients is better than having someone who just quotes rates.

Why work with us (Augusta Financial):

• We help you secure accepted offers with our expertise and reputation.
• Our "free lifetime refinance guarantee" means we're committed to your long-term home-ownership success. (Some restrictions apply)
• Your clients will get transparent breakdowns of loan options (down payment levels, PITI costs) and the true cost of ownership, including interest-deduction caps, property tax implications, principal pay-down, and appreciation scenarios.

Yesterday's rate cut is meaningful, but Mr. Powell’s language makes it clear this is not the beginning of a rapid easing cycle. The job market weakness is real, but not yet comparable to past recessions that have spurred sharp rate drops. We expect mortgage rates to decline gradually over the next year or two, rather than collapse overnight. We’ll keep a close eye on developments and will be ready when the timing is right for you.

Please let me know if you have any questions or if you or any of your clients, friends, or family members need my guidance. I’m just a call, text, or email away.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

But wait, there’s more…

Interest Rates

Took a beating yesterday! A little better today! See above for details!

Loan Programs

• We do loans on Non-warrantable condos!
• We offer 12-day escrows for pre-approved buyers, including conventional FHA/Jumbo/Bridge loans.
• We provide loans in all 50 states, so call me with anything you need.
• Government loans (FHA/VA/USDA) are in the 5s.
• Conventional loans up to $806,500 are in the high 5’s and low 6s.
• High-balance loans from $806,501 to $1,209,750 are also in the 6s.
• Jumbo loans above $1,209,750 are in the 6’s.
• ARMS in the 5’s and some in the 6’s
• Bank statement loans are available with 10% down again, with larger down payments in the 6’s++.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No-Ratio Loans require a 30% down payment.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

**Good News for Condos:**   

NONE

**Bad News for Condos***     

Nothing New!

CONDO HELP!!!

If you have a listing or a buyer interested in a specific condo and are unsure whether it is warrantable or Non-warrantable, please call me, and we can look up Fannie’s list in real-time. We don’t know when something has changed, and it would be impossible to track everything day by day, but we don’t mind looking up a few items each day.

The full state of California’s naughty list has been added to: MikeMeena.com! See the link below:

https://mikemeena.com/non-warrantable-condos/

Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!