Fed lowers interest rates for the third time this year
The Federal Reserve announced another cut in interest rates after its December meeting that ended Wednesday. This is the third rate cut the Fed has announced this year, with the others occurring at the previous two meetings.
The federal funds rate will shift to a range of 3.5%-3.75%. With this cut happening at the last meeting of the year, many are wondering what the Fed plans for interest rates in 2026.
In a statement released after its meeting, the Fed repurposed some language from the statement released before entering into 2025. “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook and the balance of risks.”
After its December 2024 meeting, the Fed did not cut rates until September of this year. If its reuse of language can hint at its future plans, it might be a while before we see another rate cut.
The next Federal Open Market Committee, which votes as a body on raising or lowering rates, is expected to meet again Jan. 27-28. This will be the first of eight meetings next year and may be one of the last for Chairman Jerome Powell.
Powell has three Fed meetings left before his second term is up and President Donald Trump announces a potential successor.
What does this mean?
The announcement from The Fed means that the cost to borrow money, including for mortgages, could drop a bit more even as mortgage interest rates are still at one of their lowest point this year.
The initial market reactions were mixed on Wednesday. The bond market was lower while the stock market climbed some after the announcement.
How does this affect homeownership?
The Fed’s decisions on interest rates can influence almost every aspect of the economy. Since the last time the Fed cut interest rates, mortgage rates have seen a slight decrease. And interest rates do affect the bond market, which in turn can influence mortgage rates as well.
A few scenarios could be in play:
If investors believe the Fed has done enough for inflation, it could rush into the bond market and drive rates lower.
There’s also the possibility of inflation coming back into focus, particularly as it relates to increases in prices due to tariffs. That has the potential to push rates higher.
The bottom line is, if you need to buy a home, you should buy a home. If you can afford to wait, you may want to wait, though the Fed has given no indication that rates could drop even more this year.
The team at OriginPoint is here to help you navigate a tricky housing market. If you have questions, we have team members available to support you. Also, if you know you need to start the homebuying process, we can assist you in getting a mortgage pre-approval.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. OriginPoint does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by OriginPoint. OriginPoint, its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
Your journey home begins here.
OriginPoint's Same-Day Mortgage (aka “FastTrack”) promotion offers qualified customers who provide certain required financial information/documentation to OriginPoint within 8 hours of locking a rate on a mortgage loan the opportunity to receive a loan approval within 1 business day of timely submission of documentation and does not suggest that the borrower will receive funding on the same day as their application submission. For purposes of this offer, documents provided after 1 pm local time or on a weekend or company holiday will be deemed submitted the next business day. OriginPoint cannot guarantee that a loan will be approved or that a closing will occur within a specific timeframe. OriginPoint reserves the right to revoke this approval at any time if there is a change in your financial condition or credit history which would impair your ability to repay this obligation. Read and understand your Loan Commitment before waiving any mortgage contingencies. Borrower documentation and Intent to Proceed must be signed within 8 business hours of receipt. Not eligible for all loan types or residence types. Minimum down payment requirements apply. Self-employed borrowers and Co-borrowers are not eligible. Not all borrowers will be approved. Borrower's interest rate will depend upon the specific characteristics of borrower's loan transaction, credit profile and other criteria. Eligible borrowers who successfully provide all required documentation within 8 business hours will receive a $250 Closing Cost Credit applied at closing, no cash value, and may not be combined with any other Lender promotions, discounts, or concessions. Not available in all states. Restrictions apply. Visit OriginPoint.com/same-day-mortgage for terms and conditions.
**Eligible borrowers must qualify for a "Clear to Close Loan Commitment" ("CTC”). OriginPoint cannot guarantee that a loan will be approved or that a closing will occur within a specific timeframe. CTC is subject to certain underwriting conditions, including clear title and no loss of appraisal waiver, amongst others. Not eligible for all loan types or residence types. Minimum down payment requirements apply. Property must be eligible for an Appraisal Waiver and borrower must opt in to AccountChek for automated income and asset verification. Self-employed borrowers and Co-borrowers are not eligible. Not all borrowers will be approved. Restrictions apply.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact OriginPoint for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. OriginPoint LLC fka Guaranteed Rate Affinity, LLC does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by OriginPoint LLC fka Guaranteed Rate Affinity, LLC. OriginPoint LLC fka Guaranteed Rate Affinity, LLC its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action. OriginPoint does not provide tax advice. Please contact your tax adviser for any tax related questions.
