(Reuters) -The interest rate on the most popular U.S. home loan dropped last week to its lowest in a year, sending homeowners racing to lock in cheaper borrowing costs as slowing jobs growth and expectations for a Federal Reserve interest-rate cut drive down yields on benchmark Treasuries.

The Mortgage Bankers Association on Wednesday said the contract rate on a 30-year, fixed-rate mortgage dropped 10 basis points in the week ended September 12 to 6.39%.

That was the lowest since early October 2024, and is down nearly three quarters of a percentage point since mid-January. 

The MBA's weekly applications index rose 29.7% last week to 386.1, the highest since April 2022. Some 60% of all applications were for refinancing, the MBA said. Its index tracking refinancing applications jumped 57.7% to its highest level since March 2022.

High borrowing costs and elevated property prices have put a chill on the labor market, with the Federal Reserve keeping short-term borrowing costs steady all year on concern that President Donald Trump's tariffs could reignite inflation.

But recent labor market data has shown a sharp slowdown in monthly job growth and a tick upward in the unemployment rate. Yields on 10-year Treasury notes, which banks use as a benchmark for setting mortgage rates, have fallen in response, and home loan rates have followed suit. 

And Fed policymakers, worried now that borrowing costs may be slowing the job market a little too much, have now signaled they are ready to start easing policy again, beginning with what's anticipated to be a quarter-point interest-rate cut at the Fed's two-day meeting that ends Wednesday.   

Concerns about inflation, which remains above the Fed's 2% goal, look likely to keep policymakers cautious about the pace of rate cuts, frustrating Trump who has demanded steep rate cuts all year for a range of reasons, including to boost the moribund housing market.

Trump's pressure campaign on the Fed has included lobbing regular insults at Fed Chair Jerome Powell for being "too late" with rate cuts and his current attempt to complete an unprecedented ouster of a Fed governor.

(Reporting by Ann Saphir; Editing by Lincoln Feast.)