Average US long-term mortgage rate edges lower, remaining near its low
for the year
[December 19, 2025] By
ALEX VEIGA
The average rate on a 30-year U.S. mortgage edged lower this week,
staying relatively close to its low for the year.
The decline brings the average long-term mortgage rate to 6.21% from
6.22% last week, mortgage buyer Freddie Mac said Thursday. A year ago,
the rate averaged 6.72%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners
refinancing their home loans, also fell this week. The rate averaged
5.47%, down from 5.54% last week. A year ago, it averaged 5.92%, Freddie
Mac said.
Mortgage rates are influenced by several factors, from the Federal
Reserve’s interest rate policy decisions to bond market investors’
expectations for the economy and inflation. They generally follow the
trajectory of the 10-year Treasury yield, which lenders use as a guide
to pricing home loans.
The 10-year yield was at 4.12% at midday Thursday, unchanged from a week
ago.
The average rate on a 30-year mortgage has been mostly holding steady in
recent weeks since it dropped to 6.17%, its lowest level in more than a
year, on Oct. 30.
Mortgage rates began easing in July in anticipation of a series of Fed
rate cuts, which began in September and continued this month. An
encouraging report on inflation on Thursday could give the central bank
cause to keep cutting interest rates next year.
The Fed doesn’t set mortgage rates, but when it cuts its short-term rate
that can signal lower inflation or slower economic growth ahead, which
can drive investors to buy U.S. government bonds. That can help lower
yields on long-term U.S. Treasurys, which can result in lower mortgage
rates.
Even so, Fed rate cuts don’t always translate into lower mortgage rates.
That’s what happened in the fall of 2024 after the central bank cut its
main rate for the first time in more than four years. Instead of
falling, mortgage rates marched higher, eventually cresting above 7% in
January this year. At that time, the 10-year Treasury yield was climbing
toward 5%.
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 This year's late-summer pullback in
rates helped lift sales of previously occupied U.S. homes in October
on an annual basis for the fourth straight month.
Home shoppers who can afford to pay cash or finance at current
mortgage rates are in a more favorable position than they were a
year ago. Home listings are up sharply from last year, and many
sellers have resorted to lowering their initial asking price as
homes take longer to sell, according to data from Realtor.com.
“Mortgage rates have eased into the low-6% range and inventory
remains well above last year’s levels, giving buyers more options
and greater flexibility,” said Hannah Jones, senior economic
research analyst at Realtor.com.
Still, affordability remains a challenge for many aspiring
homeowners, especially first-time buyers who don’t have equity from
an existing home to put toward a new home purchase. Uncertainty over
the economy and job market are also keeping many would-be buyers on
the sidelines.
Homeowners eager to refinance their home loan to a lower rate have
benefited from easing mortgage rates.
Applications for mortgage refinance loans made up 59% of all home
loan applications last week, the highest level since September,
according to the Mortgage Bankers Association.
Economists generally forecast that the average rate on a 30-year
mortgage will remain slightly above 6% next year.
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