Fed Rate Cut December 2025: What It Means for Your Mortgage
FOMC meeting December 10, 2025: 87% probability of 0.25% rate cut. Here's what it means for mortgage rates, refinancing, and whether you should lock today.
📊 December 2025 Fed Meeting: Key Numbers
🔒 Lock Your Rate Before the Fed Decision?
Current rates at 6.28% are near 2025 lows. Compare offers from multiple lenders to secure the best rate before the December 10 Fed meeting.
What's Happening at the December Fed Meeting?
The Federal Reserve's Federal Open Market Committee (FOMC) concludes its final 2025 meeting on December 10, 2025. According to the CME Group's FedWatch tool, there's an 87% probability the Fed will cut its benchmark federal funds rate by 0.25 percentage points.
This would be the third rate cut of 2025, following cuts in September and November. The federal funds rate currently sits at 4.50-4.75%, and a December cut would bring it to 4.25-4.50%.
⚠️ Important: Fed Rate ≠ Mortgage Rate
The Fed doesn't directly set mortgage rates. Mortgage rates follow the 10-year Treasury yield more closely. After the September Fed cut, mortgage rates actually rose briefly before falling. Don't expect an immediate drop on December 10.
What Happened After the Last 2 Fed Rate Cuts?
| Fed Meeting | Rate Cut | 30-Yr Before | 30-Yr 1 Week After | 30-Yr 1 Month After |
|---|---|---|---|---|
| September 2025 | -0.50% | 6.15% | 6.35% ↑ | 6.08% ↓ |
| November 2025 | -0.25% | 6.72% | 6.45% ↓ | 6.28% ↓ |
Key takeaway: Mortgage rates don't always drop immediately after a Fed cut. Markets often "price in" expected cuts beforehand. The real impact unfolds over weeks, not days.
Should You Lock Your Mortgage Rate NOW or Wait?
This is the million-dollar question. Here's a decision framework based on your situation:
✅ LOCK NOW If:
- • Closing within 30 days
- • Current rate is 6.28% or lower
- • You can't afford rate volatility
- • Your rate lock is free or low-cost
- • You're risk-averse
⏳ WAIT If:
- • Closing in 60+ days
- • You can handle rate fluctuations
- • Your lender offers float-down option
- • You're betting on further drops
- • Rate lock extension is expensive
💡 Pro Tip: Ask About Float-Down Options
Some lenders offer "float-down" provisions that let you lock now but take a lower rate if rates drop before closing. This costs 0.25-0.50% of your loan amount but provides peace of mind. Compare lenders with float-down options.
2026 Mortgage Rate Predictions
Looking beyond December, here's what experts predict for mortgage rates in 2026:
| Source | 2026 Average Prediction | Year-End 2026 |
|---|---|---|
| Redfin | 6.3% | 6.0-6.2% |
| Fannie Mae | 6.2% | 5.9% |
| MBA | 6.4% | 6.1% |
| NAR | 6.3% | 5.8-6.0% |
Consensus: Rates will average around 6.3% in 2026, gradually declining to the high-5% range by year-end. Rates may dip below 6% occasionally but won't stay there for extended periods.
For a complete analysis, read our 2026 Mortgage Rates Forecast: Expert Predictions.
Is Now a Good Time to Refinance?
With rates at 6.28%, refinancing makes sense for many homeowners. According to ICE Mortgage Technology, approximately 4 million borrowers could save by refinancing at current rates.
📊 Refinance Savings Calculator
On a $400,000 loan balance:
Use the 0.75% rule: If you can drop your rate by at least 0.75%, refinancing typically makes sense. Check your refinance rates in 2 minutes.
What Should Home Buyers Do Right Now?
🎯 Action Plan for December 2025
- 1. Get Pre-Approved Now: Lock in your purchasing power before any rate changes. Get pre-approved in minutes.
- 2. Compare Multiple Lenders: Rates vary by 0.5% or more between lenders. Shop around.
- 3. Ask About Rate Lock Options: Understand lock periods, extension costs, and float-down provisions.
- 4. Don't Time the Market: If you find the right home at an affordable payment, buy it. You can always refinance later.
- 5. Watch December 10: Monitor Fed Chair Powell's press conference for 2026 guidance.
Frequently Asked Questions
Will the Fed cut rates in December 2025?
Yes, the Fed is expected to cut rates by 0.25% at the December 10, 2025 FOMC meeting. CME FedWatch shows 87% probability of a rate cut. This would be the third rate cut of 2025.
How does a Fed rate cut affect mortgage rates?
Fed rate cuts don't directly lower mortgage rates, but they influence them. Mortgage rates follow the 10-year Treasury yield more closely. After the September 2025 Fed cut, mortgage rates actually rose briefly before falling. Expect gradual improvement, not immediate drops.
Should I lock my mortgage rate before the Fed meeting?
It depends on your timeline. If closing within 30 days, consider locking now at 6.28% (current average). If closing in 60+ days, you might wait to see post-Fed movement. Rate lock extensions cost 0.125-0.25% of loan amount.
What are mortgage rate predictions for 2026?
Experts predict 30-year rates averaging 6.3% in 2026 (down from 6.6% in 2025). Rates may dip below 6% occasionally but won't stay there long. Fannie Mae, MBA, and NAR all forecast gradual improvement through 2026.
Is now a good time to refinance?
If your current rate is above 7%, refinancing now at 6.28% could save $200+/month on a $400K loan. About 4 million homeowners could benefit from refinancing at current rates. Use the 0.75% rule: refinance if you can drop your rate by at least 0.75%.
🚀 Ready to Take Action?
Don't wait for the Fed. Current rates at 6.28% are already near 2025 lows. Get pre-approved today and lock in your rate before any volatility.