Freddie Mac said mortgage rates fell for the second straight week. The drop is relatively small, but for those looking to buy a home before the end of 2025, every bit helps. So, will interest rates continue to fall this year?
Yes, interest rates go down every week and every year.
As of Dec. 4, Freddie Mac reported that the average interest rate on a 30-year fixed-rate mortgage had dropped 4 basis points to 6.19%. The current 30-year interest rate is 50 basis points lower than this time last year. In early December 2024, mortgage rates averaged 6.69%.
The 15-year fixed mortgage rate fell 7 basis points this week and currently stands at 5.44%. It was 52 basis points lower than the same period last year.
In this case, it pays to look at the numbers. Here is Freddie Mac mortgage rate data for the past 52 weeks as of December 4, 2025:
Both 30-year and 15-year fixed-rate mortgage rates are hovering above yearly lows.
So, yes, mortgage rates are falling. However, it seems unlikely that mortgage rates will reach 6% in the near future. It may not be worth waiting for interest rates to hit that magic number before buying.
The Federal Reserve has already lowered the federal funds rate twice in 2025 and is likely to cut rates again at next week’s meeting. So, will mortgage rates fall accordingly?
When the Federal Reserve, as the Federal Open Market Committee (FOMC) is commonly known, held its September 2025 meeting, it voted to lower the federal funds rate by 25 basis points. It then announced its second 25 basis point rate cut this year at its October meeting.
The federal funds rate often directly affects short-term loan rates. While mortgage rates are not directly based on the federal funds rate, they often reflect federal funds rate trends. So if the federal funds rate falls, mortgage rates are likely to follow. vice versa.
When people anticipate a cut in the federal funds rate, mortgage rates typically fall in the weeks leading up to the meeting. Home loan rates won’t necessarily continue to fall, however back The federal funds rate was cut.
In 2024, mortgage rates fell sharply throughout August and early September on expectations that the Federal Reserve would lower rates at the September bank meeting. But after that meeting and two additional rate cuts later that year, mortgage rates stopped falling significantly.
The same thing seems to be happening in 2025. In the weeks leading up to the September meeting, mortgage rates were gradually declining as the Fed was expected to lower interest rates, and while the federal funds rate did fall, mortgage rates rebounded.
The last Fed meeting of 2025 is scheduled for December 9-10, and it seems increasingly likely that the Fed will cut interest rates for the last time this year. Currently, the CME FedWatch tool estimates the probability of a December rate cut at about 87%.
While short-term loan rates track the federal funds rate, mortgage rates track the 10-year Treasury yield even more. As of December 4, the 10-year Treasury yield opened at 4.09%, down from 4.27% a year ago.
You’re probably wondering why today’s mortgage rates aren’t in the 4% range, right?
To determine current mortgage rates, lenders add a “spread” to the 10-year Treasury note yield. The spread is the difference between the interest rate consumers pay and the interest rate on the 10-year Treasury note. Without getting too into the weeds, charging a spread helps mortgage lenders cover the costs associated with lending to the public as well as the risks of making such loans.
For example, the current average interest rate on a 30-year fixed mortgage is 6.19%, and the 10-year Treasury yield is 4.09%, giving a spread of 2.10%. A year ago, the yield on 30-year Treasury bonds was 6.69% and the yield on 10-year Treasury bonds was 4.27%, with a spread of 2.42 percentage points. Spreads are tighter today, which is one reason why mortgage rates are lower right now.
In short, no. You probably shouldn’t wait until mortgage rates drop to 6% or lower to buy a home. Mortgage rates are only one part of the affordability equation. You also have to consider housing prices, which are a factor in housing supply and demand.
The current real estate market is in a crunch. Simply put, there are more buyers than there are homes for sale, especially homes in a price range affordable to first-time buyers. When supply and demand are out of balance like this, home prices tend to stay high because sellers know there will be multiple buyers interested in them.
According to data from the Federal Reserve Bank of St. Louis, the median sales price of single-family homes has generally been trending upward since the first quarter of 2009. At the time, the median sales price was $208,400. By the second quarter of 2025, the median price had risen to $410,800.
Despite speculation about a possible recession, potential buyers may not see much relief from an actual recession. If interest rates fall, as they did in a recession, it increases the number of people looking to buy and lock in lower interest rates. This drives up demand for an already limited supply of homes.
To really save, buyers need both rates and House prices fell. Mortgage rates edged lower this month, while home prices stagnated or even declined in some parts of the country. Still, home prices are higher than this time last year and are still rising in many cities. Things may be improving for buyers, but there’s still a lot of work to do.
If you crave the comforts of home ownership, your best strategy in today’s market may be to buy something you can afford. Whether that means a smaller house or an apartment instead of a single-family home, owning something can allow you to start building equity.
Yes, when it comes to getting a mortgage, it’s crucial to shop with the best mortgage lender with low interest rates and low fees. But to help you find the ideal home that balances affordability and desire, it pays to adopt a curious mindset and consider less-discussed financial tools.
Now is the perfect time to learn about the local real estate market. By being curious, you might find that your city has more to offer when it comes to housing than you previously thought.
You may want to spend your weekend exploring lesser-known neighborhoods and suburban developments outside of the city. You never know what you may find that will expand your idea of ”home” – including new developments, school districts, and home types.
If you’re looking to pay less on your home in today’s mortgage market, a home that needs a little TLC can help you achieve that goal. Loans like FHA 203(k) mortgages can consolidate your purchase and renovation costs into one convenient loan. When you qualify and get an accepted offer, your lender will immediately fund the purchase price of the home and deposit the cost of the improvements into an escrow account. When you make repairs, the money is spread out.
How does it feel to have a longer commute but still be able to get back to the house you love? Master-planned communities tend to appear outside major cities, offering amenities like parks, shopping centers and top-notch schools—all in exchange for longer commute times. These areas would look more comfortable if they offered commuting options like park-and-ride or commuter rail. If it gets you into your dream home, don’t be afraid to consider parking and taking public transportation.
While shared walls, floors, and ceilings may not immediately scream “dream home,” they can help you find an affordable home in a great area. Apartments come in all shapes and sizes, from condos to townhouses. Depending on the area, you might even have a small backyard. However, be sure to consider HOA fees when calculating your monthly payments.
While monthly payments on a 15-year mortgage will be higher than a typical 30-year mortgage, these loans come with many benefits. Not only will you pay off your home loan faster, but you’ll also likely get a lower interest rate and save significant interest over the life of the loan.
To make today’s mortgage rates more affordable, consider a rate buy option. An interest rate buydown lets you pay cash up front in exchange for a reduction in your mortgage interest rate. A buyout can be permanent or temporary (for the first one to three years of your loan, for example). Even lowering interest rates for a few years can make home prices more affordable today.
Experts are divided on where mortgage rates will go over the next year or so. In its November forecast, the Mortgage Bankers Association (MBA) predicted that 30-year fixed rates will remain at 6.4% through 2026, then fluctuate between 6.3% and 6.4% through 2027. Fannie Mae’s November housing forecast puts 30-year fixed rates at 5.9% through the end of 2026 and predicts they will remain stagnant through 2027.
Compared to historical mortgage rates, 7% isn’t that high. While that rate may be high compared with pandemic-era rates of less than 3%, it’s comparable to mortgage rates in the 1990s and well below the double-digit rates of the late 1970s and early 1980s.
Getting a 3% interest rate is not impossible, but doing so requires perfect circumstances. You need to find a homeowner with an assumable mortgage that can be transferred to the new homeowner at the same interest rate as the original loan. Assumption mortgages are typically government-backed loans offered by agencies such as the VA, FHA, or USDA.
Laura Grace Tarpley Edited this article.