The 30-year fixed-rate mortgage averaged 6.22% as of December 11, 2025—lower than a year ago when rates hovered around 6.60%, but stubbornly above the levels many buyers hoped for after three Federal Reserve rate cuts this year.

For prospective homebuyers who've been waiting for rates to drop, the current environment offers both opportunities and frustrations.

Why Mortgage Rates Haven't Fallen More

The Fed cut rates three times in 2025, bringing the federal funds rate to 3.50%-3.75%. So why are mortgage rates still above 6%?

The disconnect stems from how mortgage rates are set. Unlike short-term rates that track Fed policy directly, mortgage rates are tied to 10-year Treasury yields—and those yields reflect investor expectations about future inflation, growth, and Fed policy.

Several factors are keeping long-term rates elevated:

  • Persistent inflation: At 3%, inflation remains above the Fed's target, keeping investors cautious
  • Government deficits: Large Treasury issuance to fund federal deficits adds supply pressure
  • Growth expectations: Resilient economic growth reduces demand for safe-haven bonds
  • Fed uncertainty: Powell's "wait and see" stance limits expectations for rapid rate cuts

Current Rate Landscape

Here's where different mortgage products stand:

  • 30-year fixed: 6.22%
  • 15-year fixed: 5.54%
  • 5/1 ARM: 5.58%

The 30-year rate is well below its year-to-date average of 6.62%, providing some relief compared to earlier in 2025.

Affordability Math

At current rates and prices, housing affordability looks like this:

  • Median home price: $415,200 (October 2025)
  • 20% down payment: $83,040
  • Loan amount: $332,160
  • Monthly payment (P&I): Approximately $2,052
  • Median family income: $104,200
  • Payment-to-income ratio: About 24%

That 24% ratio is manageable by traditional standards, though it varies dramatically by market. High-cost coastal cities remain significantly less affordable.

Rate Forecasts

Where do rates go from here? Forecasters offer varying views:

Wells Fargo projects 30-year rates averaging 6.25% in Q4 2025 and potentially declining modestly in 2026.

Mortgage Bankers Association expects rates to remain in the low-to-mid 6% range through early 2026.

The consensus view: don't expect rates to fall below 6% anytime soon, and the ultra-low rates of 2020-2021 (when 30-year mortgages fell below 3%) are highly unlikely to return.

Should You Buy Now or Wait?

This question depends on your specific circumstances:

Arguments for buying now:

  • Increased inventory: More homes are available than in 2023-2024
  • Price stabilization: Home price growth has moderated in many markets
  • Life timing: If you need a home, waiting for uncertain rate drops has costs
  • Refinance option: You can always refinance if rates drop significantly

Arguments for waiting:

  • Potential rate declines: If the economy slows, rates could fall further
  • Price corrections: Some overheated markets may see price declines
  • Renting economics: In some cities, renting remains significantly cheaper than owning

Refinancing Considerations

For existing homeowners, the refinancing calculus has shifted:

  • Purchased 2022-2024: Many of these borrowers have rates around 7%. A refinance to 6.22% saves money but may not justify closing costs
  • Purchased 2020-2021: These borrowers likely have rates between 2.5%-3.5%. Refinancing makes no sense
  • ARM holders: Those with adjustable-rate mortgages may want to lock in current fixed rates before potential adjustments

The general rule: refinancing makes sense when you can reduce your rate by at least 0.5%-0.75% and plan to stay in the home long enough to recoup closing costs.

Market Outlook

The housing market appears to be finding equilibrium after years of pandemic-era distortion:

  • Inventory recovering: More sellers are listing homes, easing the supply crunch
  • Price growth normalizing: Double-digit appreciation has given way to modest gains
  • Activity stabilizing: Transaction volumes, while below peak levels, are consistent

For buyers, this represents a more balanced market than 2021-2022's frenzied bidding wars, even if rates remain elevated.

The Bottom Line

Mortgage rates in the low 6% range represent the new normal, not a temporary spike to be waited out. Historically, rates in this vicinity aren't unusually high—they just feel elevated compared to the anomalous pandemic era.

For buyers focused on the long term, finding the right home matters more than timing rates perfectly. For refinancers, the opportunity depends entirely on your current rate and how long you'll stay in the home.