Key Takeaways
- A December Fed rate cut is once again looking likely, but that doesn’t necessarily mean mortgage rates will drop.
- Today’s 30-year mortgage rates are sitting near a 13-month low, but they can move in either direction after a Fed cut.
- Instead of trying to time the perfect rate, focus on financial readiness and the right home. If mortgage rates fall later on, refinancing can give you another chance to capture the savings.
Why a December Fed Cut Is Back on the Table
Financial markets are once again betting the Federal Reserve will cut its benchmark interest rate by a quarter point at its Dec. 10 meeting, assigning a nearly 85% probability at the time of this writing. That’s a sharp pivot from just a week ago, when odds were split on whether the Fed would cut or hold, and even more dramatic given that as recently as five days ago, markets were widely expecting a December pause.
Part of the volatility stems from the lack of timely government data following the recent shutdown. But it also reflects the competing pressures the Fed is trying to balance. Inflation remains higher than policymakers want—typically an argument for keeping rates elevated—while the job market has shown signs of weakness, which would normally support a case for cuts.
On Friday, though, public comments from a key Fed policymaker saying he was open to a December cut quickly shifted sentiment. Fed-funds futures traders moved to price in a strong probability of a committee-announced cut on Dec. 10, reversing the earlier expectation of a hold.
All of this underscores how quickly rate-cut expectations can swing. Markets react not only to economic data but also to how investors read the Fed’s communications, broader financial conditions, and even geopolitical risks. With so many moving parts, the odds of a December cut could shift again before the meeting.
For now, however, a December reduction is back on the table—raising familiar questions about what, if anything, that would mean for mortgage rates.
Why This Matters to You
Mortgage rates currently sit a bit above a 13-month low, but their next move is hard to predict, regardless of what the Fed does in December. Knowing what does and doesn’t drive the swings can help house hunters decide when to lock a rate and when to wait.
Why Mortgage Rates Often Move Their Own Way
With a December Fed cut back in play, many assume a reduction in mortgage rates would quickly follow. But the connection isn’t direct: The Fed’s benchmark rate mainly influences short-term borrowing costs—like credit cards, auto loans, and savings yields—while mortgage rates are driven by broader market forces that can push them up, down, or nowhere at all even after a Fed cut.
Instead, mortgage rates take their cues from the bond market, especially the 10-year Treasury yield, which reflects investor expectations about inflation, growth, and future Fed policy. When investors expect the economy to stay strong—or worry that inflation could pick back up—bond yields and mortgage rates often rise, even after a Fed cut.
Recent history underscores this point. After the Fed’s recent cuts in September and October, mortgage rates climbed rather than fell. And late last year, the Fed lowered rates by a full percentage point between September and December 2024. Yet by January, the average 30-year mortgage rate had surged nearly 1.25 points higher than before the Fed’s multiple cuts.
Where Mortgage Rates Stand Right Now
Though not the sub-6% level many house hunters hope for, mortgage rates are more favorable than they’ve been for much of the past year. The average 30-year fixed rate sits at 6.43%, just above October’s 6.35%—the cheapest level in the last 13 months—and well below the 7.15% peak seen in mid-May. That puts today’s rates roughly 10% lower than in the spring, offering modest but meaningful relief for buyers struggling to afford a new mortgage.
How Borrowers Can Decide Whether To Lock or Wait
For borrowers wondering whether to act now or wait for lower rates, the outlook isn’t especially dramatic. Most major forecasts, including Fannie Mae’s, expect 30-year rates to hover in the low-6% range at the end of 2025 and dip just below 6% late next year. That would offer modest relief, but not the kind of drop that would bring back the ultra-low rates of a few years ago.
“Chances are that interest rates will continue to be locked in a tight range, with neither significant downturn nor upturn,” said Christopher Carter, vice president and sales manager at Univest. “If someone is in the market to buy, they should take advantage of the rates we have and not hold out for better pricing.”
Even if rates ease a little from here, the difference may not outweigh the risk of missing out on the right home.
Important
What matters is being financially ready—with a solid credit score, steady income, manageable debt, and enough saved for a down payment—so you can move when the right opportunity arrives.
“Each consumer must examine their personal budget and determine whether the recent downturn in rates will benefit them now, or if they should roll the dice on potentially lower rates in 2026,” Carter said.
For many buyers, a practical strategy is to purchase when the timing feels right personally and refinance later if rates decline. That approach balances patience and opportunity, acknowledging that while markets may move unpredictably, personal readiness is something you can control.
