What's the mortgage interest rate forecast for December 2024?

Would-be home buyers have faced unprecedented challenges in the housing market in the post-pandemic era as surging home prices combined with high mortgage rates made homeownership unaffordable for many. When the Federal Reserve cut rates in September and November of 2024, the Central Bank's decision caused renewed hope that affordable mortgage rates would be available soon — even though the benchmark rate doesn't directly impact mortgages, which are instead closely linked to 10-year treasury yields as treasuries compete for investors with mortgage-backed securities.

Still, the promise of a lower-rate environment caused mortgage rates to plunge to a two-year low in anticipation of the Fed's first cut in years.  And with the Fed projecting more cuts into 2025, the hope among would-be homeowners was that rates would keep trending downward — ideally, with a potential decrease in home prices as a bonus. 

Unfortunately, most experts believe home price hikes are the more likely outcome if and when rates drop, and a recent rise in inflation that could cause the Fed to delay rate cuts has many buyers concerned that a more favorable environment won't be forthcoming. In turn, the big question is: What could mortgage rates look like this December? 

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What's the mortgage interest rate forecast for December 2024?

If you're wondering where mortgage rates might head this month, we've consulted with some experts to find out. 

Rates may be stable in December 

The Federal Reserve is meeting again in December, but while multiple additional rate cuts were projected through 2025, higher inflation could throw a wrench in those plans and prevent any meaningful changes in the mortgage rate market by year's end. 

"I expect mortgage rates to stay around 6.875% to 7.125% in December," says Aaron Gordon, a branch manager and senior mortgage loan officer at Guild Mortgage. "We won't likely see big moves downward until we see unemployment go up, less government spending or the Fed jump back into the mortgage market."

Melissa Cohn, regional vice president of William Raveis Mortgage, agrees that big changes probably aren't on the table this month. 

"Mortgage rates are likely to be stable in December as the markets continue to digest the planned new policies from the President-elect," Cohn says.

Concerns about the potential inflationary impact of tariffs and other policies may cause both the Fed and mortgage lenders to avoid rate decreases until it becomes clear what the new administration will actually do in office and what the economic impact will be.

"There's a lot of mortgage rate uncertainty post-election and heading into 2025," Gordon says.

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A slight decline could occur

Although a big decline in home borrowing costs probably won't happen, outside economic forces could usher in some changes.

"If the employment sector shows any weakness, rates could fall a bit in December," Cohn says. 

Higher levels of unemployment suggest a weaker economy, which could in turn prompt further Fed rate cuts to stimulate growth. 

Cameron Burskey senior partner and managing director of retirement security at Cornerstone Financial Services, concurs. 

"Given the Federal Reserve's recent rate cuts in September and November and the anticipation of further reductions in December, it's reasonable to expect a modest decline in mortgage rates in December 2024," Burskey says. 

However, Burskey did caution that "significant decreases are unlikely, as most forecasts suggest that the 30-year fixed rate will remain above 6% until 2025. Therefore, prospective borrowers should anticipate mortgage rates in the low to mid-6% range through the end of 2024."

Still, even a small rate reduction can make a big impact due to the large size of most mortgages and the long repayment timeline. For example, a $400,000 loan at 6.875% instead of 7.125% comes with monthly payments that are $67 per month lower and would reduce the total interest paid over time by almost $25,000 over the life of the loan.

Bigger cuts could also be coming down the pipeline as well, even if they don't occur in December. Gordon also notes that the incoming administration's dealings with the Fed are yet to be seen.

The bottom line

With rates likely to remain largely stable, potential buyers may want to consider taking action this December. Rather than hoping for rate cuts that may not come, or that may adversely impact the housing market by pushing home prices higher, buyers should make sure they're in the best financial position possible now and should shop around to find and lock in a rate this year. 

If and when future rate cuts come, refinancing is always an option — and it can be done later without missing out on months or years of equity that would-be buyers didn't build as they sat back and waited for a rate drop that could be a long time coming.