Yesterday, the Federal Reserve cut the federal funds rate by 25 basis points at its December meeting. As with previous cuts in September and October, mortgage markets had been expecting this cut, and had largely priced it in. In other words: Don’t expect mortgage rates to plunge in response to the news.
Today, the average interest rate on a 30-year, fixed-rate mortgage ticked down to 6.14% APR, according to rates provided to NerdWallet by Zillow. This is just one basis point lower than yesterday but 14 basis points higher than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.
Yesterday’s 25-basis-point cut from the Federal Reserve marked the committee’s third consecutive rate cut since September. So what’s next? On paper, the committee’s projections for the economy look optimistic for 2026. But right now, there’s more disagreement than usual at the Fed about how much, and how quickly, to cut rates.
At yesterday’s meeting, some committee members wanted to keep the federal funds rate as-is, while others advocated for a bigger cut.
Average mortgage rates, last 30 days
Watch: How will December’s Fed cut affect mortgage rates?
📉 When will mortgage rates drop?
Mortgage rates are constantly changing, since a major part of how rates are set depends on reactions to new inflation reports, job numbers, Fed meetings, global news … you name it. For example, even tiny changes in the bond market can shift mortgage pricing.
With the December Fed meeting behind us, the outlook is murky about the likelihood of another cut at its next meeting on Jan. 27-28. Another Fed rate cut will only happen if inflation and unemployment are kept in check.
Looking ahead, the Nerds are eagerly awaiting next week’s data drops from the Bureau of Labor Statistics for a pulse check on the economy:
-
(Dec. 16) November jobs report: The Employment Situation Summary is the biggest and most comprehensive look at U.S. employment in a given month. Among other things, it will tell us the unemployment rate and how many new jobs were created in November.
-
(Dec. 18) Consumer Price Index: All eyes are on the inflation rate, which remains above the Fed’s target of 2%. The CPI report gives us a snapshot of household spending and the effect of inflation on day-to-day expenses.
These are big reports in any month, but they might get more attention than usual next week. Forecasters are still hungry for economic data after the BLS delayed or canceled various reports during the government shutdown.
🔁 Should I refinance?
Refinancing might make sense if today’s rates are at least 0.5 to 0.75 of a percentage point lower than your current rate (and if you plan to stay in your home long enough to break even on closing costs).
With rates where they are right now, you may want to start considering a refi if your current rate is around 6.64% or higher.
Also consider your goals: Are you trying to lower your monthly payment, shorten your loan term or turn home equity into cash? For example, you might be more comfortable with paying a higher rate for a cash-out refinance than you would for a rate-and-term refinance, so long as the overall costs are lower than if you kept your original mortgage and added a HELOC or home equity loan.
If you’re looking for a lower rate, use NerdWallet’s refinance calculator to estimate savings and understand how long it would take to break even on the costs of refinancing.
There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.
If the answer is yes, don’t get too hung up on whether you could be missing out on lower rates later; you can refinance down the road. Focus on getting preapproved, comparing lender offers, and understanding what monthly payment works for your budget.
NerdWallet’s affordability calculator can help you estimate your potential monthly payment. If a new home isn’t in the cards right now, there are still things you can do to strengthen your buyer profile. Take this time to pay down existing debts and build your down payment savings. Not only will this free up more cash flow for a future mortgage payment, it can also get you a better interest rate when you’re ready to buy.
🔒 Should I lock my rate?
If you already have a quote you’re happy with, you should consider locking your mortgage rate, especially if your lender offers a float-down option. A float-down lets you take advantage of a better rate if the market drops during your lock period.
Rate locks protect you from increases while your loan is processed, and with the market forever bouncing around, that peace of mind can be worth it.
🤓 Nerdy Reminder: Rates can change daily, and even hourly. If you’re happy with the deal you have, it’s okay to commit.
🧐 Why is the rate I saw online different from the quote I got?
The rate you see advertised is a sample rate — usually for a borrower with perfect credit, making a big down payment, and paying for mortgage points. That won’t match every buyer’s circumstances.
In addition to market factors outside of your control, your customized quote depends on your:
-
Location and property type
Even two people with similar credit scores might get different rates, depending on their overall financial profiles.
👀 If I apply now, can I get the rate I saw today?
Maybe — but even personalized rate quotes can change until you lock. That’s because lenders adjust pricing multiple times a day in response to market changes.
