Here's why a rate move next week may not move the needle for mortgages
Economists and investors have been lining up behind another Federal Reserve rate cut in December. But for mortgage borrowers, the move is unlikely to deliver the relief they want.
Market pricing and a series of surveys suggested policymakers are poised to lower the federal funds rate by another quarter point at the December 9–10 meeting, following October’s cut to 3.75%–4%.
A Reuters poll found 89 of 108 economists expect the Fed to trim the target range to 3.50%–3.75%, with additional easing pencilled in for early 2026.
Yet 30‑year mortgage rates, which have hovered near one‑year lows around 6.2% for a month, are already reflecting that outlook.
“I'm expecting the Fed will cut at the meeting next week. I know there's been a lot of back and forth especially after October about Powell being somewhat hawkish, but that, I think, was more about a lack of available data due to the shutdown,” said Thomas Simons, chief US economist at Jefferies.
“While it makes sense why he would be concerned, he can't necessarily make the same argument again in December. We've seen enough support for continued cuts from most of the Board of Governors in their public comments since that meeting."
Economists still see room for easing
New York Fed president John Williams recently joined Fed governors Michelle Bowman, Christopher Waller and Stephen Miran in backing more cuts, arguing that rates could be lowered without jeopardising the inflation goal while providing “insurance” against further labour market weakness.
But as many as five of the 12 voting members openly oppose another move, underscoring a split Federal Open Market Committee after a 43‑day government shutdown delayed critical data.
“Some of the reflationary forces at play, whether it's on the fiscal side with the 'big beautiful bill' or the persistent stickiness in goods prices driven by tariffs – that's going to keep the Fed a bit restricted in what they can do next year,” said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research.
A wide gap in inflation expectations also persisted, with University of Michigan consumer surveys near 4% while market‑based measures sat far lower.
Moreover, private employers cut 32,000 jobs in November, the steepest drop since early 2023 and a sharp miss against forecasts for solid gains, according to payroll processor ADP.
“The modest fall in the ADP payrolls measure in November, coming on the back of a similar message from the Fed’s Beige Book, should be enough to persuade the FOMC to vote for another cut next week,” Stephen Brown, deputy chief North America economist at Capital Economics, wrote.
Private employers cut 32,000 jobs in November, the steepest drop since early 2023, according to ADP. Chief economist Nela Richardson cites broad-based weakness led by small businesses, as markets now price in a higher chance of another Fed rate cut.https://t.co/4duoTt2bYx
— Mortgage Professional America Magazine (@MPAMagazineUS) December 3, 2025
Mortgage market already priced in cut
Housing economists stressed that lower policy rates do not automatically translate into cheaper mortgages.
Originators and secondary‑market specialists have pointed to global demand for US Treasurys, risk premiums and bank funding costs as key drivers of home loan pricing, often overshadowing individual Fed moves.
Realtor.com also projected mortgage rates would stay close to current levels next year even if the Fed continued to ease.
“While this may be disappointing to buyers hoping for even lower rates, mortgage rates are expected to be low enough to offset price gains, causing the monthly cost of buying a home to drop in 2026 for the first time since 2020 even as home prices rise,” said Realtor.com chief economist Danielle Hale.
“On balance, the data that are currently available are likely sufficient for a majority of the committee to support a rate cut, but I expect the vote will again highlight the wide variety of perspectives on the appropriate policy decision,” Hale said.
She added that the missing government data is expected to make it harder for the Fed to judge the economy, but officials are still likely to lean on available public figures alongside their own and private-sector reports.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
