Could a Fed Rate Cut Help Mortgage Rates Fall? Today's Mortgage Rates, Dec. 17, 2024

In 2024, prospective homebuyers watched mortgage rates rise, fall and then rise again. Many hoped the housing market would open up when the Federal Reserve finally began lowering interest rates in September.

Yet mortgage rates have remained high due to converging macroeconomic factors: strong economic data and concerns over President-elect Donald Trump’s potentially inflationary policies. Mortgage rates surged over the past two months but got off to a better start in December.

Today’s average mortgage rates on Dec. 17, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US. See all of today’s mortgage rates

The average 30-year fixed mortgage interest rate is 6.79% today, a decrease of -0.01% over the last week. The average rate for a 15-year fixed mortgage is 6.11%, which is a decrease of -0.03% compared to a week ago.

With inflation slowing and the job market weakening, the Fed is set to make another 0.25% interest rate cut at its policy meeting on Dec. 18. Experts say it could be the last cut we see for a while. Depending on how the next administration’s economic policies play out, mortgage rates may still fall in 2025, though it’s unlikely rates will dip below 6% for a while.

Check out CNET Money’s weekly mortgage rate forecast for a more in-depth look at what’s next for Fed rate cuts, labor data and inflation.

Recent mortgage rate trends

Though the Fed influences the direction of mortgage rates, it doesn’t directly set them. In fact, mortgage rates tend to move ahead of the Fed, fluctuating daily in response to various economic indicators, including inflation and labor data, changes in the bond market, investor expectations and geopolitical risks.

Late this summer, mortgage rates plunged as worrying economic indicators (rising unemployment) led investors to believe the Fed would begin cutting rates aggressively. Leading up to the central bank’s Sept. 18 half-percentage-point rate cut, mortgage rates had reached their lowest point in roughly two years.

But not long after the Fed’s September policy meeting, rates began inching higher due to strong economic indicators and the election of Donald Trump, whose proposed economic policies could lead to a higher deficit and greater inflation.

The prospect of increased government spending doesn’t bode well for long-term interest rates, like on 30-year fixed mortgages, said Nicole Rueth, SVP of the Rueth Team Powered by Movement.

Though another 0.25% Fed rate cut this month looks likely, it won’t result in an equal or immediate decline in mortgage rates. Moreover, the Fed is likely to slow the pace of rate cuts in 2025, said Sam Williamson, senior economist at First American Financial Corporation, which would keep upward pressure on mortgage rates.

For a look at mortgage rate movement over the past four years, see the chart below.

Will mortgage rates drop this year?

Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.

Where mortgage rates go next depends on how the economy performs in the coming weeks and months. Robust economic data typically translates to higher mortgage rates. The opposite is true when we get weaker data, like rising unemployment or cooling inflation.

In our 2025 mortgage forecast, experts outlined a rough range for mortgages depending on potential economic outcomes.

If inflation trends lower and the labor market weakens, mortgage rates will have some room to fall, potentially into the 5% range. But if Trump’s economic policies cause inflation to reheat, it could prompt the Fed to delay additional rate cuts. In that scenario, mortgage rates can easily remain elevated or move above 7%.

Here’s a look at where some major housing authorities expect average mortgage rates to land.

How can I choose a mortgage term?

Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.

30-year fixed-rate mortgages

The 30-year fixed mortgage rate average is 6.79% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.

15-year fixed-rate mortgages

Today, the average rate for a 15-year, fixed mortgage is 6.11%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 6.43% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.

How can I get the lowest mortgage rates?

Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.

1. Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
2. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
3. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
4. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
5. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.