The consistent stability of mortgage rates in recent weeks is partly attributed to the reliability of mortgage spreads. Despite the spread between the 30-year mortgage rate and the 10-year Treasury rate being higher than its historical average, the current figure of 2.19% is significantly lower compared to previous years.
Logan Mohtashami, Lead Analyst at HousingWire, highlighted the importance of mortgage spreads in keeping mortgage rates near 6% this year, referring to them as the “unsung superheroes” of the housing sector.
Even with conflicting data on employment and inflation, interest rate traders are confident that the Federal Reserve will lower benchmark rates on Dec. 10. The CME Group’s FedWatch tool indicates that 87% of traders anticipate a 25 bps cut, bringing the federal funds rate to 3.50% to 3.75%, the lowest since September 2025.
Despite expectations of a third consecutive Fed cut, Bright MLS chief economist Lisa Sturtevant doesn’t foresee significant changes in mortgage rates. Sturtevant emphasized the traditionally slow period for the housing market during November, December, and January.
Heading into 2026, Sturtevant describes the housing market as a “wait-and-see” situation, with buyers and sellers observing mortgage rates and economic trends before making decisions.
What will the Fed do?
The Federal Reserve, under Jerome Powell’s leadership, faces dissent in its monetary policy decisions. The divide was evident at the October meeting, with conflicting views on rate cuts among policymakers.
As discussions on interest rates intensify, President Trump’s choice for Powell’s replacement is expected to influence the direction of rates. Potential candidates for the Fed chair job include Kevin Hassett, Christopher Waller, Michelle Bowman, Kevin Warsh, and Rick Rieder.
Mark Fleming, chief economist at First American, highlights the expected rise in household income compared to house prices next year, indicating improved affordability in the housing market.