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Mortgage interest rates have been quite volatile in recent years. They were near record lows in 2020 and 2021. Then they surged in 2022 and 2023. And in 2024 and 2025 they’ve been on a slow but steady decline, where they remain now at the start of the final month of the year. However, there are no signs that this volatility will ease anytime soon, and in fact, many anticipate additional changes in the final days of the year.
With the Federal Reserve set to meet for the final time of 2025 on December 9 and December 10, anticipation surrounding an interest rate cut is growing. While it will likely only come in a 25 basis point increment, any reduction here will be welcome for borrowers, including homebuyers and owners hoping to refinance. Combined with 25 basis point cuts in September and October, a federal funds rate 75 basis points lower than it was on September 1 represents a real, substantial savings opportunity for many Americans.
But some homebuyers may not even have to wait for that cut to be made official, as mortgage rates could drop before the December Fed meeting even concludes. Below, we’ll detail the reasons behind this potential dynamic and what buyers may want to do right now to prepare.
Start by seeing how low your current mortgage rate offers are here.
Why mortgage rates could drop before the December Fed meeting
Around 87%. That’s how high the chances of a rate cut at the December Fed meeting are as of December 2, 2025, according to the CME Group’s FedWatch tool. So a rate cut this month is appearing more and more likely. And with data points that can impact the Fed’s decision, like the November inflation report, set to be issued while the Fed is meeting on December 10, the data that will be primarily used to make this decision has already largely been released, therefore further cementing the chances of a cut.
This is a dynamic that mortgage lenders are familiar with. These lenders don’t need to wait for the central bank to take formal action to reduce the rates they offer to buyers and owners looking to refinance. And with a rate cut looking increasingly likely for next week, many lenders may start dropping their mortgage rates now, before the Fed even meets. So while it may be beneficial to shop for mortgages post-December Fed rate cut, don’t be surprised to see those offers mirror the ones that are listed on lender websites and marketplaces right now.
Recent history supports this possibility, too. Mortgage interest rates plunged to a 2-year low in September 2024, just hours before the Fed issued a larger-than-anticipated 50-basis point cut. That happened again in September 2025 when mortgage interest rates fell to a 3-year low, just before the Fed issued a 25 basis point cut. And it was repeated in October when rates, which had risen after the September cut, fell back to that 3-year low, again right before the Fed cut rates again.
So, while it’s understandable to think that rates will fall on December 10 or December 11, after a rate reduction is issued, the reality is more nuanced. Qualified borrowers may actually find rates low enough to justify action now. At a minimum, it’s worth shopping around to compare lenders and offers to establish a baseline to compare against.
Compare mortgage rates and lenders online today and learn more.
How homebuyers should prepare for a Fed rate cut
While homebuyers should always start with a thorough review of their credit history and score, the reality is that it may be too late to undertake that work now if you’re hoping to take advantage of a temporary decline in the mortgage rate climate this month.
But there are still ways in which you can better position yourself to secure lower rates. Shopping around for lenders, as noted, has historically been shown to be an effective way to save on rates and other expenses, like closing costs. Making a large down payment (higher than the conventional 20% most lenders mandate) can also help borrowers secure a lower rate, as it means less risk for the lender.
You should also consider mortgage points, which function as a fee to the lender in return for a lower mortgage rate. With timely but important windows of opportunity to take advantage of this month, you’ll want to be informed about this option now, so you can discuss it when the time is right.
The bottom line
Mortgage rates don’t neatly follow the Federal Reserve’s interest-rate cut timeline. Not only are they impacted by other factors besides just the Fed (the 10-year Treasury yield being another major one), but lenders only use the Fed as a guide, not as a final decision maker. So with rates here largely expected to be cut again next week, lenders may start reducing their offers in advance, now. That may mean that the affordable mortgage rate you’ve been looking for in recent years is already available. You’ll just need to spend some time – now, before the December Fed meeting – to find it and lock it in.