Author: Eric BernsteinPublished:
The big question on everyone's mind last week is "what's the Fed going to do in December?" More and more Fed members are coming out AGAINST a Fed rate cut next month, whether because of inflation concerns or lack of data and it's causing mortgage rates to tick higher.
Fortunately, 1 of those problems will be resolved soon. The Government reopened last Thursday, which means labor and inflation data should finally start flowing in soon
The average rate on a 30-year fixed rate conventional loan jumped last week to 6.28%. See what rates we're offering by signing up for our Friday rate texts.
Our LendFriend Learning Center has now has over 200 articles to help homebuyers buy with confidence. Check out our top articles of the week at the bottom of this email.
A Fed Cut This December Is No Longer A Sure Thing
Federal officials are openly splitting over whether the Fed should cut again in December, and the divide is getting louder. Neel Kashkari admitted he didn’t support the last cut in October and says current data still shows “underlying resilience,” meaning he could argue for either a cut or a hold depending on what comes in over the next few weeks. Boston Fed President Susan Collins went even further, saying she would hesitate to support another cut until inflation makes clearer progress, warning that the economy is still growing too strongly to assume price pressures will keep easing. Atlanta Fed President Raphael Bostic echoed that view, prioritizing inflation risks over labor-market softening. At the same time, Mary Daly and a handful of Governors—including Miran, Waller, and Bowman—are signaling they’re more open to easing. The result: a Fed that is increasingly publicly divided, with the hawks regaining momentum.
In practical terms, the Fed’s split is making a December cut harder to justify (there's now just a 45% chance of a cut). Investors are recalibrating around the idea that even if Trump and the Fed members he's appointed want a rate cut, there may not be the votes to support it unless upcoming labor and inflation data break clearly in the dovish direction. That’s why the December meeting, and the next move for mortgage rates, now comes down almost entirely to what the next round of jobs and inflation numbers show — without clear evidence of cooling, the Fed won’t have the support it needs to cut.
Is a 50-year mortgage a real possibility?
Last week, the idea to create a 50-year mortgage was floated by President Trump, and it immediately sparked a wave of questions about whether ultra-long terms could actually help with affordability. The truth is more complicated. Stretching the loan to 50 years does lower the monthly payment (though not by much), and for short-term homeowners—people planning to sell or refinance within a few years—it can be a temporary tool IF it's your only option to get approved. But the tradeoff is steep: you barely touch principal, total interest explodes, and long-term borrowers end up paying dramatically more than they would on a 30-year.
Our breakdown walks through real amortization examples on a $500,000 loan, shows why the product only makes sense in very narrow situations, and explains why most buyers are still better off with a 30-year.
Looking Ahead: What data will we get this week?
Now that the government has officially reopened, the data floodgates are about to open — and markets desperately need it. For weeks, the Fed has been operating without key indicators, including the September labor market report that was supposed to drop right before the shutdown began. That report, along with October’s inflation data, is now expected to show up quickly, giving policymakers their first real read on whether hiring is slowing and whether price pressures are easing.
The reopening couldn’t have come at a more important moment. Odds of a December rate cut have already fallen sharply — not because the Fed turned hawkish, but because there simply hasn’t been any data to justify a move. With fresh jobs numbers, unemployment data, industrial production, housing starts, and potentially even CPI and PCE coming this week or early next, markets will finally have something concrete to react to. And as always, it’s not the Fed’s actual decision that moves mortgage rates — it’s what the market believes the Fed will do once this overdue data is released.
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