sommart/Getty Images 
Mortgage interest rates have recently settled into the low-6% range, hovering near 3-year lows. This decline has sparked fresh interest from homebuyers who’ve been waiting on the sidelines and homeowners weighing a refinance. But as December approaches, one question looms: Will rates drop even further?
The Federal Reserve has reduced rates twice this year but inflation remains sticky. Economic uncertainty makes it tough to predict what comes next. So we asked real estate and lending professionals what’s driving rates right now and what borrowers should consider before making their next move. Below, we’ll detail what to know heading into the final month of 2025.
Start by seeing how low your current mortgage rate offers are here.
Will mortgage rates drop this December?
“Lower rates in December are a possibility, but how low they’ll go is another question,” says Brian Shahwan, vice president, mortgage banker and broker at William Raveis Mortgage, LLC.
Thao Le, assistant professor of the department of real estate at Georgia State University’s Robinson College of Business, expects the Fed to cut rates by another quarter point next month. “Mortgage rates might ease slightly in this case, but I don’t expect a significant drop,” Le notes.
Others are less certain, however. The recent government shutdown delayed key economic data releases, making it harder to gauge where the economy stands and what the Fed might do next — and by extension, where mortgage rates are headed.
What could push mortgage rates lower?
Several factors could nudge mortgage rates down in the coming weeks, with inflation at the top of the list. “Once inflation starts to come down, so will mortgage rates,” Jeremy Schachter, branch manager at Fairway Independent Mortgage Company, emphasizes.
Beyond inflation, the Fed’s December decision matters. “If the Fed cuts rates and economic data continues to show signs of weakness, long-term bond yields — and therefore mortgage rates — are likely to decline,” Le says. Fed decisions, or lack thereof, can still influence what borrowers pay.
The 10-year Treasury is another key driver to watch. Shahwan notes that it gives a good indication of where mortgage rates are headed on any given day. While not directly tied to the federal funds rate, mortgage rates track Treasury yields closely.
Learn more about your current mortgage rate options here.
What could keep mortgage rates elevated?
Not all signs point to lower rates. “An increase in inflation, initiating tariffs or week-over-week economic data showing strength in the labor market could contribute to a spike in mortgage rates,” Shahwan cautions. Rates over the past year, specifically, have proven that Fed cuts don’t automatically translate to lower mortgage rates. Market volatility and timing uncertainty also play a role.
What borrowers and owners should do right now
Given the uncertainty, what’s the best next move? Experts encourage focusing on personal circumstances rather than speculation. Here’s what they suggest:
- Don’t wait for rates to hit rock bottom if you’re ready to buy. “The home you are looking at for $500,000 at a 6.125% rate now may be $550,000 at a 5.75% rate down the line,” warns Schachter. In this scenario, “your mortgage payment wouldn’t go down because home values have gone up.”
- For refinancing, run the numbers. Le recommends looking at the gap between your current mortgage rate and today’s market rate. If that difference is big enough (typically a percentage point or more), it generally makes sense to refinance and start saving right away.
- Ask lenders about rate lock options and flexibility. “There are tons of financing tools allowing borrowers to float the rate throughout the loan process to lock at a dip,” Shahwan notes.
- Look beyond the rate. For refinancing decisions, Schachter recommends examining your full financial picture. Has your credit improved since you bought? Has your home value increased enough to drop mortgage insurance? Would switching to a shorter loan term align with your goals? These factors can all influence whether refinancing is wise now.
The bottom line
Mortgage rates could ease a bit in December, but dramatic drops are unlikely. The direction depends on Fed decisions, inflation data and broader economic shifts — most of which are beyond any borrower’s control.
What you can control, though, is how prepared you are. “Speaking with a mortgage professional and getting your ducks in a row is the best thing you can do to ensure success,” says Shahwan. A lender can help you understand available products and programs, compare your options and determine whether today’s rates make sense. They’ll also watch the market and act when timing works in your favor.