What was his reason for hating the Jews? Did Luther believe in religious toleration, or did he hate the Jews because they didn't share his beliefs?
I can go into further details if requested, but "TL;DR" answer is:
After Luther agitated that "Jews didn't convert to Christianity because Catholics treated them badly, and would convert if you treat them better", Jews still didn't show any great willingness to convert.
Here's one supporting quote (context was Luther's refusal to intercede on Jews's behalf to stop their expulsion from Saxony etc... by Elector of Saxony John Frederick, Luther's prince):
": "... I would willingly do my best for your people but I will not contribute to your [Jewish] obstinacy by my own kind actions. You must find another intermediary with my good lord." (source: Luther’s 1536 letter to Rabbi Josel as cited by Gordon Rupp, Martin Luther and the Jews (London: The Council of Christians and Jews, 1972), 14.)
Just to clarify, since your question leads me to believe you didn't quite understand his views: Luther didn't believe in freedom of conscience in the modern libertarian sense. His opposition to the idea of involuntary conversion of the Jews was based on impracticality, NOT on a notion that trying to convert Jews was something evil because Jews have the right to be Jews.
A further influence in his thinking about Jews is listed in Wiki, so I'll just quote verbatim:
It is believed that Luther was influenced by Anton Margaritha's book Der gantze Jüdisch Glaub (The Whole Jewish Belief). Margaritha, a convert to Christianity who had become a Lutheran, published his antisemitic book in 1530 which was read by Luther in 1539. Margaritha's book was decisively discredited by Josel of Rosheim in a public debate in 1530 before Charles V and his court, resulting in Margaritha's expulsion from the Empire.
What happened was that the University of Wurttemberg admitted some Hebrew scholars. These scholars having attracted some students to them among the gentiles, Luther, being an argumentative person, went to dispute with them regarding the relative merits of Judaism and Christianity. The Hebrews bested Luther in these arguments and had no difficulty making a mockery of Christianity, for example, pointing out that the genealogy of Jesus is different in different gospels and other obvious contradictions.
This humiliation infuriated Luther and caused him to later write two different pamphlets criticizing the Jews and their practices.
One book discussing these matters, "The History of the Church of Christ Previous to the Reformation" by Joseph Milner:
"Several Jews had resorted to Wittemberg, in consequence of the encouragement given to the study of the Hebrew scriptures in that university, and the attention bestowed upon their language.... Three of their rabbins (sic) came to Luther to dispute with him concerning their faith, etc"
There are many other books that discuss the same events.
Antisemitism and racism were much more common and acceptable in the olden days than now. It was much more common and acceptable to hate Jews, Blacks, Muslims, French (if you weren't French), Spanish (if you weren't Spanish), English (if you weren't English), etc.
So maybe he hated Jews, just because everyone else hated Jews at the same time?