December 16, 2025
The Federal Reserve met for the last time in 2025 last week and the result was a decrease in their benchmark interest rate of 0.25%. Overall, the decision was not surprising despite the lack of recent data the Fed could rely upon. As expected, they relied upon secondary reports such as flagging consumer confidence and the private payroll report in order to conclude that they ought to act with an air of caution in case the economy is slowing more than expected – despite inflation continuing to be stubborn. Fed Chair Powell referred to the decrease as a “close call” as the Fed balances risk to the economy vs. inflation risks.
Since the markets were already anticipating the Fed lowering rates, the bond markets did not react significantly at least initially. However, the trend of lower long-term rates such as home loans certainly is supported by the move. Most predictions coming in for 2026 are forecasting that mortgage rates will continue to drift downward in 2026, though the amount of movement is expected to be tempered unless we receive good news on the inflation front. For example, the Mortgage Bankers Association is expecting the average of 30-year mortgage rates to remain above 6.0% for all of 2026. On the other hand, Fannie Mae is a bit more optimistic in this regard and sees the 30-year rate moving slightly below 6.0% by the end of 2026.
As these predictions roll in, we continue to remind our readers that all predictions are just educated guesses. Not to say that these economists are not qualified. But it is hard to predict the future. We can’t anticipate events that could interfere with out predictions – from natural disasters to wars (including trade wars). We just went back to our December 2024 edition of the Real Estate Report which disclosed that most prognosticators were predicting that mortgage rates would average near 6.0% at the end of this year. Rates averaged a bit higher than expected this year. So, perhaps the seers will be wrong in the other direction this coming year and rates will fall further than expected. Check with us in a year, and we will be happy to tell you what really happened!
Source: origination Pro
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AMERIMUTUAL MORTGAGE (NMLS# 148447) Address: 18-33 41st Street, 2nd Floor, Astoria, NY 11105 Tel: (718) 943-9200 Fax: (718) 204 – 0657
Backed by a long history of integrity and driven by a commitment to enrich the community of Astoria Queens and the surrounding neighborhoods of Queens, Brooklyn, NYC and Long Island, AMERIMUTUAL Mortgage is family-owned and operated local business that is proud to make a difference by matching home buyers with the right mortgage products for their needs.
As a respected leader in the NYC, New York lending business, AMERIMUTUAL has been successful in revolutionizing the industry one mortgage at a time. Our company values are grounded in the principles of honesty and fair dealing. For you, this means responsible lending with reasonable fees and you can enjoy a worry-free lending experience from a local Astoria, NY business you can trust.