Mortgage Rates Ease Ahead of Fed Cut Signals

Three fast takeaways

Here’s the quick lens we’re using ahead of the meeting.

• Lenders pre-priced a 25 bps cut, so near-term rate drops should be modest—not a freefall.
• Affordability relief hinges on inventory: cheaper financing helps, but thin supply still props up prices.
• If job openings hold near 7 million, we expect only one early-2026 cut before a pause.

Rate path snapshot

Our desk view on how the next moves could filter into mortgages.

Publisher opinion: IngeniousTests view

We expect one early-2026 trim only if core services inflation cools and openings drift lower without a spike in layoffs. That bias points to a gentle mortgage downtrend rather than a surge: buyers should still negotiate buydowns and closing credits instead of waiting for dramatic rate drops.

Where rates stand now

Mortgage rates continued to decline heading into December, reaching their lowest levels of 2025. The past year has been encouraging for home loan borrowing costs, with 30-year mortgage rates starting in January at nearly 7% before gradually pulling back to the low-6% range as we look forward to 2026. That retreat is largely a story of easing inflation expectations, not a sudden change in lender appetite.

But what is good news for mortgage rates is not always good news for consumers at large. In general, interest rates on mortgages tend to be lower when the U.S. economy is showing signs of weakness and higher during times of economic strength. The past year has also marked a significant slowdown in the American labor market, marked by tumbling job growth and rising unemployment. Softer hiring is giving lenders cover to trim, but a growth scare would bring stricter underwriting.

Although the Federal Reserve does not directly control mortgage rates, it is notable that rates are declining ahead of the central bank's meeting on Dec. 9 and 10. Mortgage lenders often price in rate cuts ahead of the announcements, and it seems increasingly likely that policymakers will vote to reduce the federal funds rate this week. The key for borrowers is how the post-meeting statement frames cuts beyond December.

Falling rates are a welcome development for those waiting to buy a home or refinance their mortgages, but opinions vary on whether rates will fall any further in 2026 and beyond. Mortgage rate trends are incredibly difficult to predict, even in the most stable times, and today’s thin inventory can blunt the benefit of cheaper financing.

2026 forecasts and affordability

In today's uncertain economic environment, it is even more challenging to accurately forecast future mortgage rates, but that has not stopped some of the nation's largest real estate groups and trade associations from trying.

Realtor.com released its 2026 housing forecast last week, predicting that 30-year mortgage rates would average 6.3% next year. The real estate listings website's economics group believes home prices will rise a modest 2.2%, which could help ease affordability pressures.

Meanwhile, the real estate marketplace Zillow forecasts that mortgage rates will hold above 6% and that home values will rise 1.2% in 2026, with rents remaining essentially flat.

Outlooks from lenders and banks

Opinions on next year's housing market vary depending on whom you ask. Economists at Fannie Mae believe that mortgage rates will dip under 6% late next year.

The Mortgage Bankers Association, an industry trade group, forecasts that rates will hold steady at 6.4% throughout 2026. And the economic group at Wells Fargo Bank expects rates to bottom out at 6.15% in the first two quarters of the year, then rise slightly through 2027.

You can find details on all the latest predictions in our 2026 mortgage rate tracker, updated weekly with fresh lender commentary.