Mortgage Rates End 2025 at a 15-Month Low, Offering Hope for 2026 Buyers

Mortgage rates are closing out 2025 on a high note, hitting their lowest levels in over a year and setting the stage for more favorable borrowing conditions as we enter 2026. However, economists caution that despite the improvement, many potential homebuyers may still be “priced out” of the market.

2025 Mortgage Rates Reach Their Lowest PointThe 30-year fixed-rate mortgage averaged 6.15% this week, marking the lowest rate of the year, according to Freddie Mac. Rates have been relatively stable over the past few weeks, lingering around 6.2% since late November. By comparison, the 30-year rate averaged 6.91% a year ago and even spiked above 7% in mid-January 2025. Rates haven’t been this low since early October 2024.

The 15-year fixed-rate mortgage also dropped slightly, averaging 5.44%, down from 5.5% last week. The 15-year rate hit its 2025 low of 5.41% in both September and October. Mortgage News Daily, which calculates rates using a different method, reports the 30-year rate at 6.2% on Dec. 31, showing little change in recent days.

With upcoming economic reports, including a jobs report on January 9 and a major inflation report on January 13, rates could see some movement, though analysts expect them to remain relatively steady in the short term.

Affordability Challenges RemainEven with mortgage rates trending downward, affordability continues to be a challenge. Lisa Sturtevant, chief economist at Bright MLS, points out that meaningful progress will likely require several years of lower rates, slower home price growth, and rising household incomes. “Falling mortgage rates can definitely help with affordability, but many homebuyers are still going to be priced out in 2026,” she said, noting that the monthly payment on a median-priced home still hovers around $2,740.

Looking Ahead to Spring 2026Despite these challenges, there are signs of optimism for the upcoming spring buying season.

In November, pending home sales rose 2.6% year-over-year, according to the National Association of Realtors. Since signed contracts typically translate into closed sales a month or two later, this could signal a stronger market in early 2026.