T
he latest employment data is a mixed bag for mortgage rates, with strong job growth and low unemployment likely to keep borrowing costs elevated. The Bureau of Labor Statistics reported 256,000 new non-farm jobs in December, far exceeding expectations, while the unemployment rate fell to 4.1%. Wages rose 0.3% from November and 3.9% year-over-year, keeping inflation under control.

    Markets reacted quickly to the news, with stocks plummeting by 600 points and the 30-year fixed-rate jumping to 7.24%, its highest level in over a year. The strong employment report makes it unlikely that the Federal Reserve will cut rates later this month, keeping borrowing costs elevated.

    The Fed's next meeting is at the end of the month, and with two rate cuts forecasted for 2025, the current short-term interest rate of 4.25%-4.5% may remain in place heading into the spring homebuying season. However, some analysts speculate that rate hikes could be possible this year due to lingering inflation.

    A strong labor market can bring down inflation and interest rates, but until then, mortgage rates will likely stick near current elevated levels. The return of remote workers to offices in 2025 may also impact housing trends, with commute time becoming a top priority for prospective home buyers.