Homebuyers can start 2026 with some relief as type of mortgage fell to a 2025 low in the year-end report.

Freddie Mac’s latest prime mortgage market survey, released Wednesday, showed the benchmark average rate. 30-year fixed mortgage decreased to 6.15% from last week’s reading of 6.18%.

The average rate on a 30-year loan started the year at around 7%.

“After starting the year near 7%, the average 30-year fixed rate mortgage this week fell to its lowest level in 2025, an encouraging sign for potential homebuyers heading into the new year,” said Sam Khater, chief economist at Freddie Mac.

Mortgage rates are not directly affected by the Fed’s interest rate decision, but closely track the 10-year Treasury yield. The 10-year yield was around 4.14% late Wednesday before the New Year’s holiday.

Earlier this week, the National Association of Realtors reported that home sales in November rose 3.3% with gains in all US regions; the Northeast, the Midwest, the South and the West, a sign that the market is improving.

A ‘Sold’ sign outside a new home under construction in Tucson, Arizona, USA, on Tuesday, February 22, 2022. (Photo: Rebecca Noble/Bloomberg via Getty Images/Getty Images)

Lower borrowing costs may help housing affordability, which has been a problem for the economy, while other indicators show more improvement under President Donald Trump.

Earlier this month, the Bureau of Economic Analysis published its initial estimate of third-quarter GDP, which showed the economy grew at an annualized rate of 4.3% in the three-month period that includes July, August and September. That figure beat the expectations of economists polled by LSEG, who had estimated GDP growth of 3.3% in the third quarter.

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And inflation, although above the Federal Reserve’s 2% mandate, is falling.

The Bureau of Labor Statistics said Thursday that the the consumer price index increased 0.2% in November compared to the previous month, while it increased to 2.7% year-on-year. Both figures were cooler than the expectations of economists polled by LSEG, who projected a 0.3% monthly increase and a 3.1% year-on-year figure.

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Still, the labor market remains a wild card with soft hiring across most sectors.

In November, employers added 64,000 jobs in november The unemployment rate rose to 4.6% in November, the highest since September 2021.

Federal Reserve Chairman Jerome Powell testifies before the Senate Committee on Banking, Housing and Urban Affairs during a hearing to “examine the Semiannual Report on Monetary Policy to Congress” on Capitol Hill on June 25, 2025 in Washington, D.C. (Kent Nishimura/Getty Images/Getty Images)

Minutes from the Federal Reserve’s December meeting showed two voting members of the Federal Open Market Committee dissented in favor of leaving rates unchanged, while one dissented in favor of a larger cut of 50 basis points. In addition, six officials released economic projections suggesting they opposed a cut.

A “majority of participants” voted for a cut, while “some” of those policymakers argued that it was an appropriate forward-looking strategy that would “help stabilize the labor market” amid a recent slowdown in job creation. However, others “expressed concern that progress towards the committee’s 2% inflation target had stalled.”

The Fed cut rates by 25 basis points for the third time in a row at its December meeting, lowering the benchmark federal funds rate to a range of 3.5% to 3.75%. The decision occurred in the context of a slowdown in the labor market with high inflation above the Fed’s 2% target, a dynamic that puts both parts of the central bank’s dual mandate at risk.

This week, Trump struck again President Powell, calling him a “fool” for letting renovations to the central bank’s headquarters run over budget. Trump has said he will name a new Fed chairman to replace Powell in January.