As we move toward the end of 2025, many first-time homebuyers and current homeowners are watching the Federal Reserve closely, hoping for signs of a potential rate cut. But after the release of long-delayed September employment data, the odds of a December rate cut remain slim. Here’s what happened, why the markets reacted the way they did, and what it means if you’re thinking about purchasing or refinancing a home.
Market Odds Say “Unlikely”, At Least for Now
According to the CME FedWatch Tool, markets are pricing in only about a 35% chance of a quarter-point rate cut in December. That’s a slight increase from the prior day’s 30% odds, but still not a strong signal.
The Federal Reserve’s current target rate stands between 3.75% and 4.00%, and based on current data, policymakers don’t appear ready to make a move just yet.
Delayed September Jobs Report Paints a Mixed Picture
The September nonfarm payrolls report, delayed due to the recent government shutdown, was the first jobs data update investors have seen in weeks. And while the headline numbers were stronger than expected, they came with some caveats.
What stood out:
✔️ Job growth beat expectations
The economy added 119,000 jobs, more than double the 50,000 expected by economists.
✔️ But unemployment ticked up
The unemployment rate rose from 4.3% to 4.4%, reaching its highest level since October 2021.
This increase raised eyebrows among investors and policymakers alike, as the unemployment rate tends to hold more sway over the Fed’s policy decisions than the headline job-growth number.
✔️ Wages and labor participation still look solid
Former Fed Vice Chairman Roger Ferguson summed it up well: the numbers show an economy that’s “still hanging in there”. neither booming nor weakening dramatically.
Why the Fed May Still Hold Off on Cutting Rates
Despite the rise in unemployment, the data doesn’t appear weak enough to force the Federal Reserve’s hand. A few reasons:
1. The job market remains resilient.
Healthy labor force participation and steady wage growth show the job market still has underlying strength.
2. Policymakers are watching the trend, not just one report.
The Fed is focused on sustained progress toward its dual mandate: stable prices and maximum employment. A one-month uptick in unemployment isn’t typically enough to trigger a policy change.
3. Inflation remains close to target.
With inflation near the Fed’s preferred level, policymakers have room to be patient and avoid premature rate cuts.
Why Some Investors Still Think a December Cut Is Possible
Even though the odds are low, some analysts believe a December cut is still on the table. Kay Haigh of Goldman Sachs Asset Management noted that “continued labor market softness” could push the Fed to act, especially as Chair Jerome Powell approaches the end of his term in May.
In other words: if future data shows more cooling in the job market, the Fed might choose to ease policy sooner rather than later.
What This Means for Homebuyers and Homeowners
At Onshore Mortgage, we’re watching these developments closely because Fed policy directly affects mortgage rates and your buying power.
Here’s what to take away:
📌 Don’t wait for a rate cut that may not come.
Market odds still point to no December rate cut. If you’re ready to buy or refinance, today’s opportunities may be better than what the market is hoping for down the road.
📌 Mixed economic signals mean more rate volatility.
Strong job growth paired with rising unemployment creates uncertainty, one of the main drivers of rate movement. Working with a mortgage expert who monitors these trends can help you lock in the right rate at the right time.
📌 Local market experience matters more than ever.
Even as national trends shift, your local housing market operates on its own rhythm. As the top-rated mortgage company in Fairhaven, Dartmouth, New Bedford, and Acushnet, Onshore Mortgage provides insight grounded in local expertise, not just national headlines.
Final Thoughts
The Federal Reserve may not cut rates in December, but the door isn’t fully closed. As 2025 winds down, the direction of mortgage rates will depend heavily on upcoming labor and inflation data.
If you’re considering buying a home, refinancing, or simply want to explore your mortgage options, now is a great time to connect with a trusted local mortgage broker. At Onshore Mortgage, we specialize in fast clear-to-close timelines, award-winning service, and guidance that helps homebuyers make confident decisions, no matter what the Fed decides next month.
*Credit and income restrictions do apply. Please visit our Disclosures page for a detailed breakdown of all loan types.
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