Monthly payments on a $600,000 mortgage have improved following the Fed's third rate cut of 2025. Sakchai Vongsasiripat/Getty Images

After months of shifting economic signals, from cooling (but still elevated) inflation to a softer jobs market, the Federal Reserve issued another 25-basis-point rate cut at the close of its December meeting this week, marking its third reduction in four months . The move brought the federal funds rate to its lowest level since 2022, a meaningful pivot after years of aggressive tightening. And that, in turn, could be a big relief for many of the homebuyers who have been sidelined by higher-than-average mortgage rates .

While mortgage rates don't respond directly to the Fed's benchmark rate, they do tend to follow the broader sentiment that rat

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