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Anticipation over a Federal Reserve interest rate cut, which was barely registering a few weeks ago, is now growing to a fever pitch. Following an unemployment report that showed the rate increasing to its highest level since October 2021 and new data this week that show 32,000 private-sector jobs lost in November, not to mention concerns over widespread layoffs, the chances of a Fed rate cut to stimulate the economy are rising. As of December 4, 2025, the CME Group’s FedWatch tool has a cut for the December 10 Fed meeting listed at just under 90%.
And while the unemployment concerns are significant, any new rate cut will be welcome for borrowers, especially homebuyers who have been forced on the sidelines in recent years after mortgage rates briefly hit their highest level since 2000. But mortgage interest rates have been gradually declining in 2025, helped in part by the Fed’s resumed interest-rate cut campaign that was started in the final months of 2024. Understanding how the Fed’s recent changes impacted the mortgage rate climate could help buyers looking to take action now understand their next steps.
So, what exactly happened to mortgage rates following the previous two 2025 Fed rate cuts? And what can buyers expect ahead of a December one? That’s what we’ll detail below.
Start by seeing how low your current mortgage rate offers are here.
What happened to mortgage rates after the previous two Fed rate cuts?
As easy as it would be to assume that mortgage interest rates will fall neatly after the Fed issues an interest rate reduction, the reality is more complicated. In September 2024, for example, the average mortgage interest rate plunged to a 2-year low right before the central bank issued its 50 basis point reduction. And that dynamic has twice been repeated in 2025, too.
In September 2025, before a 25 basis point Fed rate cut, the average mortgage interest rate on a 30-year term dropped to 6.13%, a 3-year low, on the morning of the cut – not in the hours or days that followed. In fact, mortgage rates actually ticked up slightly in the subsequent weeks. But they fell back to that 3-year low in late October, again right before the Fed issued another 25 basis point cut.
Using these recent rate changes as a guide, buyers should feel somewhat comfortable expecting little change after next week’s presumed Fed rate cut. They should also, however, be monitoring the mortgage rate climate closely now and early next week for temporary, affordable windows of opportunity to lock in a low rate. With the chances of a Fed rate cut so significantly elevated right now, many lenders may feel secure enough to lower their mortgage rate offers preemptively.
Buyers should utilize this time to compare rates and lenders carefully. While waiting for the Fed to actually cut rates is unlikely to hurt, knowing which lenders are offering competitive terms in advance can help. That way, you’re ready to take decisive action when the cut is formally issued and reverberates throughout the broader rate climate.
Establish a baseline to compare against by shopping for rates and lenders online now.
The bottom line
Fed rate cuts don’t impact mortgage rates in a direct, linear way that will be simple for buyers and owners to exploit. It’s a complicated relationship that will require borrowers to be strategic in their approach and, for now at least, will require daily monitoring for timely opportunities. But if that means big savings via a lower mortgage purchase or refinance rate, it may be worth the temporary sacrifice. And if recent history is a reliable indicator, these opportunities may present themselves much quicker than you’d normally expect by taking a look at the Federal Reserve meeting calendar. So consider getting prepared now. It can only help.