Mortgage Rates Slightly Lower This Week While Jobs Data Portends a Rise

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A strong labor market is great news for the U.S. economy, but it could mean mortgage rates are less likely to drop.

Kate Wood

Senior Writer/Spokesperson

Jeanette Margle

Head of Content, Home Loans

Published Jun 5, 2026 Fact Checked How is this page expert verified? NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible. More on our editorial rigor

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🤓 Kate On Rates: June 5, 2026

A resilient labor market

The data drops kicked off on Tuesday with the April Jobs Openings and Labor Turnover Summary (JOLTS). This report from the Bureau of Labor Statistics captures movement within the U.S. labor market: Employers' open positions, people starting new jobs, and people leaving them, voluntarily or not. The big news for April was job openings, which blew past predictions and reached the highest level since May 2024. Looking past the 7.6 million open positions, though, the JOLTS data looked a little shakier. Actual hires dropped, as did separations (folks leaving jobs for whatever reason). While fewer layoffs certainly sounds good, a lower quit rate isn't the best: Reluctance to leave a job doesn't signal a ton of faith in the labor market. But Wednesday's data from payroll administration firm ADP showed glimmers of hope that those April job openings blossomed into May hires. The ADP National Employment Report uses the company's payroll data, which covers an extensive swath of privately employed workers in the U.S. The report gained prominence during last fall's government shutdown, when for a while private industry data was the only available option.The ADP data beat expectations for the number of new hires, and continued to show widespread gains. Though still strongest in healthcare and services, May hires increased in eight of the 10 sectors ADP covers.This morning, we got the Bureau of Labor Statistics' Employment Situation Summary for May. Better known as the jobs report, this data provides key information like the U.S. unemployment rate. In terms of the data released this week, you can think of JOLTS and ADP as the previews and the jobs report as the feature presentation.And the jobs report did not disappoint, with the number of May hires well over market predictions. Unemployment was flat, as expected. "It’s getting more difficult to cast aside strength revealed in the jobs report data," says Elizabeth Renter, NerdWallet senior economist. "The last three months have been stronger than anticipated, and the numbers keep getting revised upwards. This bodes well for overall economic growth and resilience." Okay, so all in all the job market looks pretty decent. What does that have to do with mortgage interest rates?

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The Fed and mortgage rates

All of this data showing a surprisingly strong labor market came in hot on the heels of pretty grim inflation numbers. That combination arguably spells doom for any rate cuts from the Federal Reserve this year. Though the Fed doesn’t set mortgage rates, the central bankers' decisions have considerable influence. Changes to the federal funds rate — the short-term borrowing rate the Fed actually controls — ripple outward to affect virtually every part of the economy. In the case of mortgage rates, what markets expect the Fed to do often affects mortgage rates more than the Fed's actual actions. By the time the central bankers meet and announce a hike or cut, mortgage lenders have often already priced in the Fed's predicted move. Signals that the Federal Reserve is shifting into cutting mode tend to push mortgage rates lower; if it looks like rate hikes are on the table, that generally puts upward pressure on mortgage rates.Here's where the data comes in. The Federal Reserve tends to lower the funds rate when the job market is faltering; the idea is that reducing borrowing costs can encourage businesses to expand and hire. Raising the funds rate, on the other hand, can slow down spending — squelching inflation, too. If the job market's doing just fine but inflation's a problem, that's basically a recipe for higher rates.

A tough case for cuts

All of this is happening as a new chair is taking the reins at the Federal Reserve. Kevin Warsh began his term just two weeks ago. During his confirmation hearing Warsh repeatedly emphasized that he would not be beholden to President Trump's wishes for lower rates. (The president has relentlessly requested lower rates since the beginning of his second term, maligning Warsh's predecessor Jerome Powell at seemingly every turn.)Warsh has seemed to favor lowering the funds rate, though he has his own rationale. He believes that artificial intelligence (AI) will allow businesses to dramatically increase productivity without raising costs. That means the economy would be growing without inflation accelerating, making it safe to lower rates.But exactly how AI is changing the nature of work is still an open question, and any near-term rate cuts are going to be a tough sell. At the Federal Reserve's last meeting in April, three of the Fed governors dissented over language they felt implied future changes to the funds rate would be cuts. This week, two of those dissenting Federal Reserve governors made the case that inflation needs more attention in public remarks. A weakening job market would make it easier to argue for cutting rates to support it. But with employment looking strong at the same time that inflation keeps accelerating, markets are already betting on the Fed raising the funds rate as early as its September meeting. Mortgage rates won't make a serious move until a rate hike is virtually certain, but in the meantime this backdrop could limit how much mortgage interest rates are able to fall. Explore more onHow to Move in 2026Mortgages

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