12/12/2025
PSA: please read!!!!
No, the current news is NOT saying mortgage rates are going to be 3.75%; rather, the Federal Reserve just cut its benchmark rate (federal funds rate) to a range of 3.5% to 3.75% in December 2025, but mortgage rates are tied to the 10-year Treasury yield and aren't expected to drop dramatically, hovering closer to 6% with slight declines predicted, not to the Fed's benchmark level, because of inflation/deficit concerns.
Fed Cuts Benchmark Rate: The Fed lowers the federal funds rate (what banks charge each other) to stimulate the economy, with the latest cut bringing it to 3.5%-3.75%.
Mortgage Rates Follow (Loosely): Mortgage rates are influenced by this, but they track the 10-year Treasury yield, not the Fed's rate directly.
Market Factors Matter More: Persistent inflation and deficits mean investors demand higher yields on Treasuries, keeping mortgage rates elevated.
Current Mortgage Reality: While the Fed's cuts help, experts forecast 30-year fixed rates to stay around 6.3% in 2026, improving affordability slightly but not reaching 3.75%.
In Summary: The 3.75% figure refers to the Federal Reserve's overnight lending rate, a signal, but actual mortgage rates (like 30-year fixed) are driven by longer-term market forces and are expected to stay significantly higher, around the low 6% range, for the near future.
