U.S. Mortgage Rates Decline to 2025 Low Amid Federal Reserve Rate Cuts

The average rate for a 30-year fixed mortgage in the United States has decreased to 6.15%, marking the lowest point in 2025. This decline follows the Federal Reserve's recent interest rate cuts, which began in September and continued into December.

The Federal Reserve's decision to lower the key interest rate to 3.6% in December was influenced by concerns over inflation and a sluggish labor market. The vote was 9-3, with some officials advocating for a larger cut due to weak employment data.

In the housing market, sales of existing homes rose by 0.5% in November compared to October, reaching an annual rate of 4.13 million units. However, this figure represents a 1% decline from November 2024. The national median sales price increased by 1.2% year-over-year to $409,200, setting a record high for November.

Despite the drop in mortgage rates, affordability remains a challenge, particularly for first-time buyers. Inventory levels are tight, with 1.43 million unsold homes in November, translating to a 4.2-month supply.

Economists anticipate that the average rate on a 30-year mortgage will remain slightly above 6% into 2026.