The average 30-year fixed-rate mortgage rate jumped 27 points from 6.26 percent to 6.53 percent on Friday, according to data from the Mortgage News Daily (MND) mortgage rate index that is updated on a daily basis. This is one of the biggest single-day rate increases MND has ever tracked.

A strong employment situation indicates a more robust customer demand for mortgages, thus potentially keeping rates higher and lowering any chances of a rate decline.

The U.S. Bureau of Labor Statistics (BLS) released its employment situation summary report for September on Oct. 4. The report showed that 254,000 new jobs were added last month, far exceeding the 140,000 jobs estimated by experts. This was also up from the 159,000 jobs added in August. In addition, the unemployment rate fell for the second consecutive month, from 4.2 percent to 4.1 percent. With the jobs report showing persistent strength in the labor market, mortgage rates surged.

Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA) pointed out that the stronger-than-expected September employment report suggests a "successful slow landing" of the American economy.

However, the report also stokes worries that inflation "may not move in a straight line to the Fed's 2 percent target," he said. As such, the report "could certainly slow the expected pace of rate cuts."

The Federal Reserve had reduced its benchmark interest rates by 50 basis points last month, the first such rate cut since it started pushing up rates in 2022. The agency had also signaled an additional 50-point cut for this year.

Fratantoni noted that the MBA is forecasting longer-term rates, including mortgage rates, to "remain within a relatively narrow range over the next year."

The positive employment report "will push mortgage rates to the top of that range, but we do expect that mortgage rates will stay close to 6 percent over the next 12 months," he stated.