Will mortgage rates fall in December? Here's what experts predict

Mortgage rates soared in the post-pandemic era, leaving borrowers scrambling to find home loans under 7.00%. This came as a big shock to those who'd become used to the 3.00% to 4.00% rates that lasted from the end of the great recession until COVID-19 hit and sent inflation surging. 

As a result, many would-be homebuyers put off their home purchases in hopes of lower mortgage rates, and refinancing was also off the table for many due to high borrowing costs. When inflation began to cool, though, it appeared they'd get their wish for lower costs as the Federal Reserve dropped the benchmark interest rate during both the September and November Fed meetings.

Unfortunately, while there was a brief dip in current mortgage rates, the trend soon reversed course, and the cost of borrowing actually got more expensive again — frustrating those hoping for low rates to finally come in 2024. So for those waiting to buy a home and putting off their purchase in hopes they'll get a lower rate, the big question now is: What's going to happen with home-buying costs in December? 

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Will mortgage rates fall in December? Here's what experts predict

If you're wondering whether mortgage rates will fall this month, here's what experts have to say on this issue. 

Mortgage rates probably won't fall much, if at all, in December

There's some unfortunate news for those hoping mortgage rates will decline in December. There's little reason to believe this is a likely outcome.

"While we may see mortgage rates drop modestly in December, anyone expecting a significant change for the better may be disappointed," says Darren Tooley, senior loan officer at Cornerstone Financial Services.  

Change likely isn't on the horizon for a few reasons, according to Tooley. 

"The next two-day Fed meeting isn't until mid-December, and while most experts still predict another rate cut of 25 basis points, there are signals they may pause until they meet again in January," Tooley says. "Plus, even if the Fed does make another cut, mortgage rates are still near 7% even after the Fed cut rates by 50 basis points in September and by another 25 basis points in November."

While frustrating for buyers, these trends show Fed rate drops don't necessarily mean mortgage rates decline. In fact, Sarah Alvarez, vice president of mortgage banking at William Raveis Mortgage, explained that the Federal Reserve's decision to cut rates doesn't directly impact mortgages at all, as the Fed only sets the benchmark rate at which banks borrow from each other. A decline of 0.75% in the benchmark rate doesn't mean mortgages get 0.75% cheaper. 

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Mortgage rates may rise

Stable rates may seem like a bad outcome for those who've been waiting for a decline in borrowing costs, but there's actually a worse potential outcome on the table. 

"It seems unlikely that mortgage rates will fall in December," Alvarez says. "A better question is whether they will remain stable or continue on their recent march up. Unfortunately, concerns over the next administration's potentially inflationary policies have shot 10-year treasury yields up, which is typically the closest correlation for mortgage rates banks are offering." 

Aaron Craig, VP of mortgage and indirect sales for Georgia's Own Credit Union, points out another troubling fact. 

"After the last couple Fed Funds rate cuts in the last couple months, mortgage interest rates actually went up," Craig says. 

This could easily happen again, especially as treasury yields trend higher.

Future rate cuts could be coming 

So, is there any hope for those looking to buy a home? While the news may be bleak for December, there is reason to believe there are promising days ahead. 

"Unfortunately, I don't believe we will see inflation numbers coming down in December, which we will need before we see any major improvement in mortgage rates. However, If we can get better than expected inflationary data and if there are signs of slowing in the jobs reports, along with a December rate cut by the Fed, we may see rates hit the mid-6% range, which would be a significant win for homebuyers," Tooley says. 

Waiting for this to happen may not be the best idea for would-be buyers, though, especially as many experts think a big drop in mortgage costs could result in borrowers flooding the housing market and sending home prices higher.  

The bottom line

Ultimately, for those who are in a good financial position and who can afford to borrow at today's rates, moving forward sooner rather than later is likely the best choice. Future refinancing is an option, but returning to today's rates or home prices in the future may not be, so don't let hopes of a future rate drop hold you back from your dream home.