Mortgage rates climbed to 6.32% on Monday, surprising prospective homebuyers just one day before the Federal Reserve begins its final policy meeting of 2025. The jump, reported by The Mortgage Reports, lifted the average 30-year fixed rate by five basis points to 6.324%, signaling that lenders may be moving preemptively ahead of Wednesday's widely expected interest-rate cut. The increase adds pressure at a time when rising job losses, elevated inflation and weakening affordability are already reshaping the U.S. housing market.
For a typical American household purchasing a median-priced home of $415,200, monthly mortgage payments now reach approximately $2,052-roughly 24% of the average family's income, according to estimates from Bankrate cited by CBS News. The climb comes despite market indicators that point strongly toward a reduction in the federal funds rate. CME FedWatch places the probability of a quarter-point cut at 88%, which would bring the target range to 3.75%-4%.
Economists say the divergence reflects heightened uncertainty. "Uncertainty ahead of the Federal Open Market Committee's December meeting could result in short-term volatility in mortgage rates as more data comes in," said Sam Williamson, senior economist at First American, in comments published by The Mortgage Reports. The Fed will announce its decision Wednesday afternoon at the conclusion of its two-day meeting.
The latest uptick follows a period in which buyers briefly saw rates touch their lowest levels in three years. After starting the year above 7%, mortgage rates fell several times in 2025, reaching as low as 5.99% in November, according to Zillow. Those declines benefited households waiting for affordability to improve, but the current reversal has narrowed the window.
Broader economic forces are amplifying the strain. Employers have cut more than 1.1 million jobs through November-the highest total since 2020 and a 54% increase from the same period last year. Tariff-driven inflation also remains persistent. The National Federation of Independent Business reported a 13-percentage-point jump in the share of small-business owners raising prices in November, the largest monthly increase in the survey's history.
The key factor driving mortgage rates higher, analysts say, is the bond market. The 10-year Treasury yield, which mortgage rates tend to follow more closely than the federal funds rate, rose to 4.179% this week, pushing borrowing costs upward even as policymakers prepare for another cut. Historically, mortgage rates have often fallen in the weeks ahead of Fed decisions only to rise afterward, a pattern seen before the September and October cuts earlier this year.
Forecasts remain divided. Fannie Mae expects the 30-year mortgage rate to average roughly 6.3% through the end of 2025 and drift toward 5.9% in late 2026. The Mortgage Bankers Association takes a more cautious view, projecting rates will hold near 6.4% next year.
Fed policymakers themselves appear split. Chair Jerome Powell warned in October that a December cut was not a "foregone conclusion," citing signs that the labor market remains resilient despite the rising pace of layoffs. "It's difficult to recall a time when the Federal Open Market Committee has been so evenly divided about the need for additional rate cuts," said Michael Pearce, chief U.S. economist at Oxford Economics, according to CBS News.
