Mortgage Rates Expected to Drop as Inflation Eases and Fed Steps Down on Rates

By Alex Chen | Tuesday, 16 December 2025 11:10 AM EST

Americans looking to buy a home could see additional mortgage rate relief as inflation continues to ease and the Federal Reserve moves toward lowering interest rates, according to Pierre Yared, White House Council of Economic Advisers acting chair.

Yared stated that mortgage rates ultimately track the Federal Reserve’s policy rate and should decline further as economic conditions stabilize. “As inflation continues to normalize and as the Fed continues to decrease interest rates, we should anticipate additional relief for families when it comes to mortgages,” Yared said.

Recent housing data indicates the average 30-year fixed mortgage rate currently sits just above 6%, while 15-year fixed rates remain in the mid-5% range. Although rates have been slow to move recently, Yared noted that the broader trend points toward gradual improvement for buyers.

Yared argued that inflationary pressures surged under the Biden administration, forcing the Federal Reserve to aggressively raise rates. With inflation now retreating, he said the central bank has room to ease policy without jeopardizing economic stability. “It’s natural that given this inflation is back down to historic ranges, that the Fed brings interest rates back down to historic levels,” Yared added.

The acting chair highlighted economic gains since President Donald Trump returned to office, stating mortgage rates have already declined from earlier highs and are putting more money back in the pockets of prospective homeowners.

Yared acknowledged that recent government shutdowns complicated economic data collection, including employment metrics used by the Federal Reserve. He noted these gaps may have slowed rate adjustments in the short term.

Despite near-term uncertainty, Yared expressed confidence that continued inflation normalization and steady economic growth will improve housing affordability heading into 2026. “We’re moving in the right direction,” he said, emphasizing that easing inflation and lower rates would help restore confidence for families considering major financial decisions.

Additionally, Yared pointed to a recent uptick in the national unemployment rate to 4.6% as reflecting renewed economic confidence rather than weakness, citing increased participation in the labor force. “The headline number doesn’t tell the full story,” he explained. “When you look under the hood, it’s entirely driven by reentry into the labor force — more people want to participate in President Trump’s economy.”