Mortgage rates edged slightly lower on Wednesday compared to last week, driven by bond market fluctuations due to mixed economic indicators: a weak November jobs report and a lukewarm inflation reading that may be overly optimistic.
The average interest rate on 30-year fixed mortgages fell to 6.18% for the week ending December 24, down from 6.21% the previous week, according to Freddie Mac data, while the average rate was 6.85% during the same period in 2024.
Sam Khater, Chief Economist at Freddie Mac, said the drop in rates represents a “welcome gift” for aspiring buyers. Over the holiday weekend, borrowing costs rose slightly following volatility in 10-year Treasury yields, reflecting key economic data, including a rise in unemployment to 4.6%—the weakest level since September 2021—and a stronger-than-expected GDP growth for the third quarter.
Amid the Federal Reserve’s stable monetary policy and reduced trading during the holiday period, mortgage rates remained relatively steady toward the end of 2025, offering some hope for buyers entering 2026 with better rates compared to spring 2025, when rates exceeded 6.80%. This slight improvement boosts purchasing power despite ongoing uncertainty in the economy and monetary policy.
Mortgage rates are determined by the overall economic environment and individual financial circumstances. These rates are linked to 10-year U.S. Treasury yields, which are influenced by economic growth and inflation levels. Higher inflation typically leads to higher yields and thus higher mortgage rates, while lower inflation or a weak labor market tends to push rates down.
Additionally, mortgage rates are influenced by personal factors such as credit score, loan amount, property type, and down payment. Borrowers with strong financial histories receive lower rates, while those with higher credit risks face higher rates.
