Will Interest Rates Go Down in December? | Predictions 2025

Mortgage rate forecast for next week (Dec. 16-20)

December brought the third straight week of falling interest rates.

The average 30-year fixed rate mortgage (FRM) dropped to 6.6% on Dec. 12 from 6.69% on Dec. 5, according to Freddie Mac.

“The combination of mortgage rate declines, firm consumer income growth and a bullish stock market have increased homebuyer demand in recent weeks. While the outlook for the housing market is improving, the improvement is limited given that homebuyers continue to face stiff affordability headwinds,” said Sam Khater, chief economist at Freddie Mac.

In this article (Skip to...)

• Will rates go down in December?
• 90-day forecast
• Expert rate predictions
• Mortgage rate trends
• Rates by loan type
• Mortgage strategies for December
• Mortgage rates FAQ

Will mortgage rates go down in December?

“Treasury yields have also climbed in response to market expectations of inflationary pressures tied to the incoming administration’s proposed policies, such as tariffs and tax cuts, even though these measures have yet to take effect, putting additional upward pressure on mortgage rates.”

-Sam Williamson, senior economist at First American

Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% and as high as 7.79%, according to Freddie Mac. That range narrowed in 2024, with a spread of 6.08% to 7.22%.

With the economy possibly heading into a recession, we may have already seen the peak of this rate cycle. But if inflation rises, mortgage rates could uptrend. Of course, interest rates are driven by many factors and notoriously volatile, so they could change direction any given week.

Experts from CoreLogic, Home Qualified, First American, Realtor.com, and CJ Patrick weigh in on whether 30-year mortgage rates will climb, fall, or level off in December.

Expert mortgage rate predictions for December

Molly Boesel, principal economist at CoreLogic

Prediction: Rates will moderate

“While the Federal Reserve once again cut the federal funds rate, longer-term interest rates had already adjusted for the cut and mortgage rates stayed in the high-6% range for most of November. There is little to suggest that mortgage rates will decrease by much in the coming weeks, therefore look for the 30-year mortgage rate to run in the high-6% range for the rest of the year.”

Ralph DiBugnara, president at Home Qualified

Prediction: Rates will decline

“Mortgage rates have spiked post-election mostly based around the unknown of a new administration and inflation numbers creeping back up. I believe to end the year we will see a decrease in home sales and consumer spending compared to previous years. This combined with a seasonal slow down may change investor and consumer sentiment which will ultimately lower rates slightly on average from November.”

Danielle Hale, chief economist at Realtor.com

Prediction: Rates will moderate

“Mortgage rates are going to be data dependent in December. Recent inflation data has surprised to the high side, and while October hiring was lackluster, extenuating circumstances from strikes to hurricanes likely impacted the numbers. An additional pickup in inflation or stronger labor market data is likely to push mortgage rates higher even if it doesn’t cause the Fed to forego another rate cut. On the flip side, more modest readings on inflation or the labor market could help soften longer-term rates, including for mortgages.”

Rick Sharga, CEO at CJ Patrick Company

Prediction: Rates will moderate

“It seems likely that rates on 30-year mortgage loans will end the year slightly higher than they were in December of 2023 when rates were at roughly 6.6%-6.7%. Inflated yields on the 10-year Treasury bonds are the culprit. Those yields rose due to unexpectedly strong economic reports recently, and will probably stay somewhat elevated due to concerns that some of the economic policies President-elect Trump advocated during the campaign may be inflationary, or add to the country’s already-record $35 trillion debt. Markets hate uncertainty, and that uncertainty will probably keep rates right around 7% for the balance of the year.”

Sam Williamson, senior economist at First American

Prediction: Rates will moderate

“Investors are split on the likelihood of another 25-basis point cut in December, following recent comments made by Federal Reserve Chair Jerome Powell suggesting that the central bank is not rushing to lower rates. This uncertainty poses upside risks on Treasury yields and, consequently, mortgage rates, in the near term. Treasury yields have also climbed in response to market expectations of inflationary pressures tied to the incoming administration’s proposed policies, such as tariffs and tax cuts, even though these measures have yet to take effect, putting additional upward pressure on mortgage rates.

“Mortgage rates are not expected to drift much lower in December than where they are today. However, rates could drop if data shows a sudden economic slowdown or labor market deterioration. Conversely, rates could rise further if the economy outperforms expectations or inflation comes in hotter than expected. Despite short-term headwinds putting upward pressure on mortgage rates, we still anticipate a downward trend toward in 2025 if the labor market continues to soften and inflation slows, despite some expected volatility along the way.”

Mortgage interest rates forecast next 90 days

As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to the average 30-year fixed-rate mortgage spiking in 2023.

With inflation gradually cooling, the Fed adjusted its policies with rate cuts in September and November. Additionally, the economy showing signs of slowing has many experts believing mortgage interest rates will gradually descend in 2025.

Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.

Mortgage rate predictions for 2024

The 30-year fixed-rate mortgage averaged 6.6% as of Dec. 12, according to Freddie Mac. Two of the five major housing authorities we looked at project 2024’s fourth quarter average to finish below that.

National Association of Realtors sits at the low end of the group, predicting the average 30-year fixed interest rate to settle at 6.1% for Q4. Meanwhile, the National Association of Home Builders had the highest forecast of 6.69%.

Current mortgage interest rate trends

Mortgage rates fell to a two-month low, after decreasing for the third straight week.

The average 30-year fixed rate declined to 6.6% on Dec. 12 from 6.69% on Dec. 5. Meanwhile, the average 15-year fixed mortgage rate fell to 5.84% from 5.96%.

Source: Freddie Mac

After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023. Many experts and industry authorities believe they will follow a downward trajectory into 2024. Whatever happens, interest rates are still below historical averages.

Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Mortgage rate trends by loan type

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.

Mortgage rate strategies for December 2024

Mortgage rates displayed their famous volatility throughout 2024. Fed cuts in September and November, with the likelihood for more provide optimism for descending rates, but ongoing inflation battles keep them in check.

Previously, the central bank held off on a rate hike at eight consecutive meetings, preferring to see if the economy would keep cooling organically. They finally deemed inflation’s downtrend as organic and made its first cuts since 2020. As always, the committee said it would adjust its policies as necessary — which could mean additional cuts or possibly none at all.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Be ready to move quickly

Indecision can lead to failure or missed opportunities. That holds true in home buying as well.

Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.

“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.

And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.

If mortgage rates continue on a downward trajectory, more and more buyers will likely enter the market after being priced out on the sidelines. Being decisive (and prepared) should only play to your advantage.

Shopping around isn’t only for the holidays

Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.

Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

• Your credit score and credit history
• Your personal finances
• Your down payment (if buying a home)
• Your home equity (if refinancing)
• Your loan-to-value ratio (LTV)
• Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

Mortgage interest rate FAQ

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

¹Today's mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

Selected sources:

• https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
• http://www.freddiemac.com/research/datasets/refinance-stats/index.page