Mortgage Rates Fall-and Could See Another Cut Beforeโ 2026
Recent commentary from Federal Reserve officials is increasing the likelihood of an interest rate cut in the coming weeks, perhaps โleading to further declines inโข mortgage rates. J.P.โ Morgan’s chief U.S. economist โMichael Feroli noted, “the โฃlatest round ofโฃ Fedspeak tilts the odds toward the โขcommittee deciding to cut rates in two weeks from today. We’re backโข to looking โforโ a final cut in January.”
The anticipated shift comes as the housing market enters โitsโฃ traditionally slower period.โ Accordingโ to Bright MLS chief economist Lisa Sturtevant, “Monthly home โคsales are lowest in November, December and January.Listing activity slows down during the winter as prospective โฃsellers set theirโ sights โon earlyโ spring.”
A Decemberโฃ rate cutโ is widely expected, โwith traders assigning an 80 percent probability to โขthe move. Experts believe this could push mortgage rates to 2025 lows as โฃthe year ends. “A further cutโฆcould bring mortgageโฃ rates โคnear 2025-lows just as the year comes โto a close,” said Krimmel, โฃadding that this would “give homebuyers somthing to be โthankful for headingโ into โข2026, while potentially buoying aโ housing market which has seen some light โฃtailwinds of late.”โข
Recent housing data supports this optimism.Pending home sales increased 1.9 percent inโ October, and existing home sales haveโฃ experienced four consecutive โmonths โคof annual โขgrowth. Builders โare also offering moreโ competitive pricing and financing options.
As the fall home-buying season winds down โขafter โคThanksgiving, attention is shifting back to โthe Federal Reserveโ and the release ofโ delayed governmentโ data, according to Krimmel. The Fed‘s decisions will largely โdepend on โขthe outlook for โinflation and the labor market. “If inflation cools, the โlaborโ market rallies, and the Fed delivers another cut, the housing market could enter 2026 โwith โreal momentum,” he stated.
Whileโค rates recently โhit โคa 13-month low, Sturtevant anticipates they will “likely stay in โthe tight range they have been in for the past several weeks.” She also โคcautioned, “It is looking increasingly likely that the โFed will cut interest rates when it meets on December 10. However, we should not โexpect that to translate into aโข bigโ drop โin mortgage rates.”
Some industry โveterans remain skepticalโ of an immediate cut.โข Melissaโฃ Cohn, regional vice presidentโ ofโ William Raveis โMortgage, emphasized the Federal Reserve’s reliance on data. “They’ve always impressed upon everyone that theyโ like to rely upon โfactual data for โtheir decision making,” she said. “If ther’s vrey little data โฃtoโข be presented with, they โmay find themselves better off โคwaitingโข until the โnext meeting, when there’s more data for them to โขmake the right decision.”
Ultimately, Sturtevant described the current housing market as โaโข “wait-and-see” environment heading into 2026, with both buyers and sellers observing trends in mortgage rates, โthe economy, andโ their personal financial situations.
