Housing News

Mortgages Rates Dip Slightly as the New Year Approaches

Mortgage interest rates ticked down ever-so-slightly as 2025 comes to a close.

Interest rates averaged 6.21% for 30-year, fixed-rate mortgages in the week ending Dec. 18, according to Freddie Mac. That was down, just a nudge, from 6.22% in the previous week.

However, it was about half a percentage point lower than this time last year, when rates averaged 6.72%. That can lower monthly mortgage payments or boost homebuying power.

“The average 30-year fixed-rate mortgage has remained within a narrow 10-basis point range over the last two months,” said Freddie Mac Chief Economist Sam Khater in a statement.

The lower rates come after the U.S. Federal Reserve voted earlier this month to lower its benchmark interest rate by a quarter of a percentage point. While mortgage rates are separate, they generally move in the same direction.

Mortgage applications from buyers hoping to purchase a home were down about 7% from the previous week in the week ending Dec. 12, according to the Mortgage Bankers Association. But homebuyers put in about 13% more applications compared to this time last year.

“Purchase application volume typically drops off quickly at the end of the year,” MBA Senior Vice President and Chief Economist Mike Fratantoni said in a statement.

Fewer shoppers are typically in the market looking for homes around the holidays, despite it being the best time of the year to buy.

Homeowners are also taking advantage of lower rates. Applications to refinance an existing loan shot up 86% from the same week a year earlier, according to MBA. However, they dipped 4% from the prior week as many homeowners likely focused on their holiday preparations.

Millions of homeowners may be able to save money on their monthly mortgage payments through a refinance. That’s because even small changes in rates can add up quickly.

“Rates are going to bump around, particularly over the next few weeks as we get a whole host of data on the economy,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. The multiple listing service covers the mid-Atlantic region. “Rates likely will be lower in the spring, and there will be more homes for sale, but buyers could face more competition.”