With the Federal Reserve‘s final meeting of 2025 scheduled for 9 and 10 December, the chances of a rate cut now stand at approximately 87 per cent, according to CME Group’s FedWatch tool. However, history suggests borrowers may not need to wait for the official announcement to secure lower rates.
Mortgage lenders often act before the Fed’s decisions, adjusting their offers in anticipation of policy changes. This pre-emptive behaviour has created opportunities for savvy borrowers willing to shop around before policymakers convene.
Why Lenders Are Moving Early
This pattern is well established. In September 2024, mortgage interest rates plunged to a two-year low just hours before the Fed announced a larger-than-expected 50-basis-point cut, CBS reported. The trend repeated in September 2025 when rates fell to a three-year low ahead of a 25-basis-point cut, and again in October, when rates dropped to that same level before another rate reduction.
These movements reflect how mortgage markets price in expected policy moves before they happen. With key data—such as the upcoming November inflation report—largely released ahead of the December 10 meeting, the market has already factored in potential rate changes.
The sector has responded positively to these expectations. Rocket Companies, a major mortgage provider, saw shares close up 8.44% at £14.86 ($19.66) on Tuesday, as traders positioned for a rate cut in December. Its shares have surged approximately 84% year-to-date, driven by anticipation of easing monetary policy, according to Simply Wall St.
The Transatlantic Picture
British homebuyers are also on a similar trajectory. The Bank of England is widely expected to cut interest rates from 4% to 3.75% on 18 December 2025, with markets pricing in about a 90% likelihood of this move.
The synchronised timing of central bank meetings on both sides of the Atlantic presents a coordinated window of opportunity. The HomeOwners Alliance reports that a mortgage price war has already pushed some fixed deals below 3.6%— the lowest since 2022.
At the Bank of England‘s November meeting, policymakers were split 5-4 on whether to hold rates steady. Four members voted for a cut to 3.75%, citing peaked inflation. Governor Andrew Bailey acknowledged that rates remain on a ‘gradual path downwards’ but emphasised the importance of ensuring inflation returns to the 2% target.
What Homebuyers Should Do Now
As of 1 December, the average mortgage interest rate in the US for a 30-year term is 5.99%, and 5.37% for a 15-year loan. While these figures reflect some improvement from recent highs, they remain elevated compared to the ultra-low rates of the early pandemic.
Financial experts advise borrowers to take proactive steps to benefit from potential rate drops. Shopping around remains crucial, as rates can vary significantly between lenders. Making a larger down payment—above the standard 20%—can help secure better terms by reducing lender risk.
‘Mortgage rates are currently around their low for the year, which has boosted both refinance and purchase activity,’ said Mike Fratantoni, chief economist at the Mortgage Bankers Association. ‘MBA is forecasting another two 25-basis-point cuts to the federal funds target in December 2025 and then in the first quarter of 2026.’
Mortgage points offer another way to lower long-term rates. These upfront fees can be paid to secure a reduced rate, and understanding this option now could provide significant savings given the limited window before the holidays.
The Bottom Line
Mortgage rates do not always follow the Federal Reserve’s interest rate moves directly. They are influenced by broader factors such as Treasury yields and lender competition. As a result, the affordable rates borrowers have been waiting for could already be within reach.
For those who have been patiently waiting for relief from high borrowing costs, December 2025 could deliver an unexpected gift. The key is acting before the official announcement—lenders may move early to attract business ahead of the anticipated rate cuts.
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