Bad news for the economy is good news for mortgage rates.

Mortgage rates have dropped steeply in recent days, hitting the lowest levels in nearly a year after a weak jobs report boosted the odds of more or larger Federal Reserve interest rate cuts in the months ahead.

The average rate for a 30-year fixed mortgage was 6.28% on Monday, down from 6.5% a few days earlier, according to Mortgage News Daily. Some brokers are advertising sub-6% rates on certain types of 30-year purchase and refinancing loans.

The latest leg down started on Friday, when 10-year Treasury yields, which closely track mortgage rates, plunged after the Bureau of Labor Statistics data showed that the US added just 22,000 jobs in August. Revisions to earlier data also slashed job gains from May to July.

Read more: The Fed, jobs, and inflation: How they're all related

Yields continued to drop on Monday ahead of two key economic releases. On Tuesday, the Bureau of Labor Statistics will publish revisions to jobs data for the 12 months through March, with economists anticipating the new numbers showing slower job growth. On Thursday, inflation data for August will be released.

Particularly large downward jobs revisions or relatively benign inflation could provide new evidence that the economy is losing steam and send yields lower still. Mortgage rates had been drifting lower in recent weeks ahead of an expected rate cut from the Fed at its September meeting, and traders now see higher odds of a larger 50 basis point move on Sept. 17, or a faster cutting cycle between now and December.

But mortgage rates could just as easily begin moving higher again, as they did last year after the Fed cut benchmark rates by 50 basis points in September.

James Dinh, a loan officer in Santa Ana, Calif., said he’s running the refinancing math on clients with mortgages in the high 6% area. Many of them will be good refinancing candidates when they can land high 5% rates.

He doesn’t advise them to gamble on rates going even lower, citing times like last year, when mortgage rates rose in the fall despite multiple Fed rate cuts.

Learn more: Is now a good time to buy a house?

“The mid-5s or the high-5s — that’s when you should strike,” Dinh said. “Nobody has a crystal ball. I could say to somebody, ‘Keep waiting for it to drop lower and lower,’ but you just don’t know where that bottom is.”

At current levels, roughly 3.1 million mortgages are "in the money" for refinancing now, according to ICE Mortgage Technology. That's the most since October 2024, and up from 2 million a few weeks earlier.

Abdul Vanadze, the president and chief executive officer of Millennia Mortgage Group in Dayton, Ohio, said he started seeing an uptick in business a few weeks ago when rates first started moving lower. Given that mortgage rates often reflect Federal Reserve interest rate moves before they happen, Vanadze isn't sure they'll go too much lower. He recently advised one client closing on a home at the end of the month to take advantage of current levels.

"I told him the rates are pretty good at this point," Vanadze said. "And instead of guessing, let's go ahead and lock the rate."

Dig deeper: 8 tips for finding the lowest mortgage rates right now

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

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