Mortgage Rates Fall-and Could See Another Cut Before 2026
Recent commentary from Federal Reserve officials is increasing the likelihood of an interest rate cut in the coming weeks, perhaps leading to further declines in mortgage rates. J.P. Morgan’s chief U.S. economist Michael Feroli noted, “the latest round of Fedspeak tilts the odds toward the committee deciding to cut rates in two weeks from today. We’re back to looking for a final cut in January.”
The anticipated shift comes as the housing market enters its traditionally slower period. According to Bright MLS chief economist Lisa Sturtevant, “Monthly home sales are lowest in November, December and January.Listing activity slows down during the winter as prospective sellers set their sights on early spring.”
A December rate cut is widely expected, with traders assigning an 80 percent probability to the move. Experts believe this could push mortgage rates to 2025 lows as the year ends. “A further cut…could bring mortgage rates near 2025-lows just as the year comes to a close,” said Krimmel, adding that this would “give homebuyers somthing to be thankful for heading into 2026, while potentially buoying a housing market which has seen some light tailwinds of late.”
Recent housing data supports this optimism.Pending home sales increased 1.9 percent in October, and existing home sales have experienced four consecutive months of annual growth. Builders are also offering more competitive pricing and financing options.
As the fall home-buying season winds down after Thanksgiving, attention is shifting back to the Federal Reserve and the release of delayed government data, according to Krimmel. The Fed‘s decisions will largely depend on the outlook for inflation and the labor market. “If inflation cools, the labor market rallies, and the Fed delivers another cut, the housing market could enter 2026 with real momentum,” he stated.
While rates recently hit a 13-month low, Sturtevant anticipates they will “likely stay in the tight range they have been in for the past several weeks.” She also cautioned, “It is looking increasingly likely that the Fed will cut interest rates when it meets on December 10. However, we should not expect that to translate into a big drop in mortgage rates.”
Some industry veterans remain skeptical of an immediate cut. Melissa Cohn, regional vice president of William Raveis Mortgage, emphasized the Federal Reserve’s reliance on data. “They’ve always impressed upon everyone that they like to rely upon factual data for their decision making,” she said. “If ther’s vrey little data to be presented with, they may find themselves better off waiting until the next meeting, when there’s more data for them to make the right decision.”
Ultimately, Sturtevant described the current housing market as a “wait-and-see” environment heading into 2026, with both buyers and sellers observing trends in mortgage rates, the economy, and their personal financial situations.
