02/09/2026
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Rates Decline Again On More Job Weakness
MORTGAGE RATES declined again this week and are once again approaching their 52 week lows with conventional rates around 6% and VA and FHA closer to 5.75% as can be seen in the first graph below.
As mentioned in previous newsletters, the graph below depicts three different measurements of rates with the Mortgage News Daily (Blue Line) being the most accurate as it is calculated daily and therefore captures volatile movements in rates. The other two are calculated only weekly and therefore can be suspectable to significant lags especially when markets are volatile.
For most of 2024 and 2025, rate decreases have been driven by the dramatic drop in yearly inflation from over 9% in 2022 to just under 3% now. However, more recently we have seen rates continue to slowly drop due to the weakening in the labor markets in addition to the Federal Reserve's decision to start lowering short-term (Fed Funds Rates) to help prevent the economy from going into recession.
THE JOBS MARKET is now showing signs of stress among many different measures--first was the Challenger Layoff announcements which measures the of level of newly announcement and upcoming job layoffs.
What made this release significant:
Layoffs jumped sharply vs prior months
Cuts were broad-based (tech and non-tech: finance, retail, media, manufacturing)
Companies explicitly cited:
slowing demand
cost pressure
AI / efficiency restructuring
macro uncertainty
Why markets care:
Challenger data often leads actual labor weakness by 1–3 months. When it spikes, hiring usually slows next.
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Another measure of weakness:
The Job Openings and Labor Turnover Survey (JOLTS) measures:
Job openings
Quits (worker confidence)
Hires
What stood out:
Job openings fell meaningfully
Quits rate continued to drift lower
Hires failed to rebound
Why this matters:
Fewer openings + fewer quits = workers feel less secure and employers are pulling back.
The weakness also appeared in the ADP employment report below showing continued weakness in jobs where there were only 22k jobs created with the bulk of those in the education and healthcare industry which is not sensitive to changes in the economic environment.
However weak this may be, we are still not looking at recessionary type levels of activity and this should continue to be supportive of both home buying and continued downward pressure on interest rates!!
Have a great week!!!
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