Mortgage Interest Rates

Average mortgage rates at the end of December 2025 trended downward to the lowest rates in over a year. According to Freddie Mac, the 30-year fixed-rate mortgage dropped to 6.15% to close out the year. Meanwhile, the 15-year rate declined to 5.49%.

How Much Will Rates Decline?

The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.09% in November – a 3-basis point increase from the previous month. The spread between the 30-year fixed mortgage rate and the 10-year Treasury remains somewhat elevated at 215 basis points, well above the roughly 150-180 basis points seen in a stable market.

While the spread has narrowed from the wide gap in 2023, it continues to reflect ongoing market uncertainty, keeping mortgage rates higher than their historical relationship to 10-year Treasury yields.

Impact of Rate Declines on Housing

Falling mortgage rates have shown some small impacts on housing activity. According to the latest Mortgage Bankers Association report, mortgage application activity strengthened, with refinancing applications rising and purchase applications also increasing. Additionally, existing home sales rose to a eight-month high in October.

However, faced with stubbornly high home prices and elevated interest rates, many would-be buyers continue to stay on the sidelines until housing affordability conditions improve.