Mortgage Rates Update: December 31st, 2025
- Bill Knudson
- Jan 2
- 1 min read
As we close out the year, the mortgage market has provided a final bit of positive news for prospective homeowners and those looking to refinance. For the week ending December 31, 2025, the 30-year fixed mortgage rate decreased by 3 basis points, settling at 6.15 percent. This drop is particularly noteworthy because it occurred while the 10 Year Treasury rate actually rose by 3 basis points to 4.18 percent.
From my perspective as an economist, this inverse movement is a strong signal of stabilizing risk appetite. When mortgage rates fall despite rising benchmark yields, it indicates a significant compression of the market spread. This week, that spread tightened by 6 basis points.
Upcoming releases:
Next new jobs Jan 9
Next CPI release is Jan 13
Next Fed meeting is Jan 28
Key Developments
Key market metrics as of 12/31/2025 are:
The 30 Year Fixed Mortgage Rate is 6.15 percent.
The 10 Year T Note Rate is 4.18 percent.
The Current Spread is 197 basis points.
The Safety Cushion above the historical average is 29 basis points.
This tightening has brought the spread down to just 29 basis points above its long term historical average of 168 basis points.
For consumers, this translated into a 2 dollar reduction in the monthly payment for a 100,000 dollar loan, now at 609 dollars. We enter the new year with mortgage spreads closer to historical norms than we have seen in quite some time.
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