Happy December! Here's a recap of the last month in the world of mortgage rates.
Over the last few weeks, mortgage rates have shown a bit of volatility, but the general direction has been toward modest relief following an upward shock at the end of October. The average 30-year fixed mortgage rate recently dipped to around 6.2%. Meanwhile, 15-year fixed mortgages have held near 5.50%. Here are the top stories from the last month.
The Fed:
The Fed had a meeting 10/29 and cut borrowing rates as expected, but you’ll see in the chart above that mortgage rates shot upwards following the meeting. This is because they outlined less planned cuts in the future than expected. Fed Chair Powell said another rate cut in December was "far from a foregone conclusion". This was the fourth rate cut in a row where mortgage rates have actually gone up afterwards, showing the contradiction in short-term (Fed Benchmark) vs. long-term (mortgages) interest rates. Next May, Powell’s term is up and he will be replaced by a Trump appointed official. This new leader will likely be much more inclined to advocate for lowering rates.
The Fed will meet for the last time of 2025 on 12/10. The reason for the rally in interest rates over the last week is an increasing expectation for a rate cut. It was sitting at a 50/50 chance for most of the month but as of today the market is pricing in an 87% chance of a rate cut in nine days. This is largely on the back of John Williams (President of the Federal Reserve Bank of New York and a voting member of the policy-setting committee) and Christopher Waller (a member of the Fed’s Board of Governors) stating that current labor-market data shows weakness, making a December rate cut “appropriate.”
Policy development:
The Fed also announced it's winding down its balance-sheet runoff (i.e. stopping quantitative tightening) beginning December 1. That matters because investors view balance-sheet runoff as upward pressure on rates. Ending it tends to support lower long-term rates which impacts mortgages.
Economic Data Reports:
The government finally opened back up and while we’re still waiting for some missed data reports to be published, we are mostly caught up. Both inflation and unemployment jumped 0.1% this month, to 3.0% and 4.4% respectively. Creeping inflation contributes to higher-for-longer interest rates, but rising unemployment has the opposite effect and in theory should lower rates. Whichever wins out over the next 6-12 months will be the main driver of the Fed’s decision making in 2026 which will influence mortgage rates.
My Crystal Ball:
Chances are we will see another Fed meeting where mortgage rates head upwards following their press conference. Right now the market is expecting a rate cut next week and 2 more in 2026, which I'd expect Powell to express caution towards further rate cuts again. I think we could see solid economic data this holiday season as well which will leave rates in the mid 6%s into the beginning of next year. If you have a mortgage above 7%, I’d recommend refinancing before the 12/10 Fed meeting.
Monthly RUNdown: October 21, 2025


