The BareStory
The Federal Reserve is scheduled to hold its final meeting of the year on December 9-10, where an interest rate cut is widely anticipated. This comes as mortgage rates have been on a downward trend through 2025, reaching three-year lows in recent months.
In early December, the CME Group's FedWatch tool indicated the probability of a rate cut was approximately 87%. One summary stated the expected reduction is 25 basis points, which would lower the target for the federal funds rate to a range between 3.50% and 3.75%. As of December 1, one report placed the average interest rate for a 30-year fixed mortgage at 5.99%.
A drop in mortgage rates may occur before the Fed's formal announcement, as lenders often adjust their rates in anticipation of a central bank decision. This pattern was reportedly observed in September 2025, when mortgage rates declined to a three-year low just before the Fed announced a rate reduction. However, mortgage rates are not tied exclusively to the Fed's actions and are also influenced by other factors, including the 10-year Treasury yield.
Prospective borrowers have been advised to prepare their finances to take advantage of any potential rate drops. Suggestions included comparing offers from different lenders, improving credit scores, and considering a larger down payment or paying for mortgage points to help secure a lower interest rate.
How it may affect me
As a U.S. reader:
• Potential homebuyers and those refinancing may see lower monthly payments, as 30-year mortgage rates have already reached three-year lows and may decline further.
• Lenders might lower rates before the Fed's formal announcement, so borrowers could see changes in the market ahead of the mid-December meeting.
• Securing the best rate is not automatic and may require improving your credit score, making a larger down payment, or comparing offers from multiple lenders.
