Mortgage rates drop to 11-month low after weak ADP jobs print

Mortgage rates reached another new low for 2025 on Thursday morning after a weak ADP jobs report caused bond yields to dip slightly ahead of the significant jobs report that will be released on Friday.

Current 30-year fixed mortgage rates are at 6.45% according to Mortgage News Daily, marking an 11-month low. Mortgage rates reached a high this week of 6.53% and are now down 8 basis points from those levels after two softer labor reports: the job openings report on Wednesday and today’s ADP jobs report.

Recent reports have indicated a softening labor market, as evidenced by the July BLS Nonfarm Payroll report and continuing jobless claims, which reached a three-year high in 2025. However, today’s ADP jobs data missed expectations, reinforcing the trend of labor data falling short of target levels. For me, since 2022, it’s been labor over inflation when talking about mortgage rates, and the only reason mortgage rates have tended to fall in 2023, 2024 and 2025 is when the market sees data that created an economic or job market scare.

Jobs Friday Is key

So a lot has been priced into the mortgage market currently, and the 10-year yield has had an impossible task of breaking under 4.18% this year. In fact, the only time the 10-year yield did this was in the aftermath of the Godzilla tariffs, when many market participants were pricing in a recession. I discuss how much lower mortgage rates can go on today’s episode of the HousingWire Daily podcast. If we can close below 4.18% and get some follow-up bond buying, then we have some legs to go lower, but as you can see below, it’s going to be a hard task. Especially as we have many Fed members talking about no rate cuts in 2025.

One of the things I have tried to stress is that the labor data has been soft recently. It won’t take much to see some kind of improvement from a three-month average of 35,000 jobs per month in the payroll report tomorrow and any improvement or beating of estimates can send bond yields and mortgage rates higher.

For some time I’ve been concerned that we are losing jobs in manufacturing and residential construction, and even the specialty trade construction labor is falling now. These are not good signs of a solid labor market.

Conclusion

As I write this, the 10-year yield is at 4.18%. This leaves me just 38 basis points away from my lowest target level for the 10-year yield in 2025, which is 3.80%. A lot has already been factored into the mortgage market. Unless the Federal Reserve adopts a more dovish stance and we see more economic or labor data weakness, it will be difficult for yields — and consequently mortgage rates — to decrease much further.

On a positive note, mortgage spreads have improved in 2025, and they tend to improve when yields increase — limiting the damage when bond yields rise. The mortgage spreads are a much different story this year versus in 2023.

So, buckle up for a fun Friday, but for today, mortgage rates have hit a 11-month low.