Dec 18: The Fed Spoke, Rates Dropped, Now What?

Post-Fed Edition: Rates Drop to 6.22% (Yes, Really)

Author

Alex Veytsman
December 18, 2025

🎄 The Lending Letter 🏡

Post-Fed Edition: Rates Drop to 6.22% (Yes, Really)

Happy Wednesday! ☕ You know what's better than finding the perfect gift on sale? Waking up to mortgage rates that actually moved in your favor. Today we're sitting at 6.22%—down from yesterday's 6.27%—and exactly one week before you're supposed to have all your holiday shopping done. Priorities, right? 🎁

📊 TODAY'S 30-YEAR FIXED RATE
6.22%
Down 0.05% from yesterday | Per Mortgage News Daily | As of 12/18/25

🎯 What Just Happened: The Fed Meeting Aftermath

The Federal Reserve just wrapped up their final meeting of 2025, and while they made their rate decision, mortgage rates don't just automatically follow the Fed's moves. Instead, the 10-year Treasury yield—which mortgage rates actually track—responded to the Fed's forward guidance and economic projections. 📈

The result? We saw a small but meaningful dip in mortgage rates. At 6.22%, we're looking at rates that are genuinely workable, especially when you consider where we were just a few months ago. Think of it as finding a parking spot right in front of the store during the holiday rush—you take it and don't overthink it. 🅿️

📅 The December 25th Deadline Reality

Here's something most people don't realize: if you want to close before year-end, your window is essentially this week. Most title companies and lenders are operating on skeleton crews from December 23rd onward. According to industry data, the median time from application to closing is 44 days, but some lenders can fast-track qualified buyers in 3 weeks. Cutting it close? Absolutely. Impossible? Not quite. ⏰

💰 Lender Promos: Your Year-End Opportunity

🏠 Need a Loan on Any Property? Whether it's your primary residence or rental property number twelve, fill out this form and we'll connect you with lenders who are hungry to hit year-end targets. That motivation works in your favor. 💪

🏢 Investment Property? December closings mean you can start taking depreciation deductions immediately for 2025. Even if you only own the property for two weeks this year, those deductions still count. Talk to investment specialists here who understand the tax game.

🏖️ STR/Airbnb Dreams? Winter might seem like odd timing, but smart STR investors know that ski season, warm-weather escapes, and holiday rentals print money. Connect with STR loan experts here who specialize in short-term rental financing. ⛷️

🧠 Educational Corner: Understanding Adjustable Rate Mortgages (ARMs)

Let's talk about something that's been making a quiet comeback: ARMs (Adjustable Rate Mortgages). Before you immediately think "2008 housing crisis," hold on—today's ARMs are very different animals. 🦁

Here's what you need to know: The most common ARM is a 5/1, which means your rate is fixed for the first 5 years, then adjusts annually after that. According to Bankrate's analysis, 5/1 ARMs are currently pricing around 5.75-6.00%—roughly 0.25-0.50% lower than 30-year fixed rates.

💡 When Does an ARM Make Sense?

Scenario 1: You're Not Staying Long-Term
Planning to sell or refinance within 5 years? That lower rate saves you real money. On a $500,000 loan, a 5/1 ARM at 5.75% vs. a 30-year fixed at 6.22% saves you about $135/month for those first 60 months. That's $8,100 in your pocket. 💵

Scenario 2: You Expect Income to Increase
If you're early in your career or expecting significant income growth, starting with a lower payment and potentially handling higher rates later can work. According to CFPB guidance, this strategy works best when you have strong financial discipline. 📊

Scenario 3: Investment Properties
Many real estate investors use ARMs strategically. If you're planning to do a cash-out refi once the property appreciates, or if you're using the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat), an ARM's lower initial rate improves your cash flow during the value-add phase. 🏗️

The Critical Part: Today's ARMs have rate caps. A typical 5/1 ARM might have a 2/2/5 cap structure: max 2% increase at first adjustment, max 2% per year after that, and max 5% total over the loan life. So if you start at 5.75%, the worst-case ceiling is 10.75%. Read the fine print and understand your caps. 🔍

🏘️ For Real Estate Investors: The December Tax Strategy

If you're an investor, listen up—there are moves you can make in the next 13 days that could save you thousands in taxes. Not exaggerating. 💰

1. The Cost Segregation Play
Bought an investment property this year? A cost segregation study can reclassify parts of your property from 27.5-year depreciation to 5, 7, or 15-year schedules. This accelerates deductions massively. On a $500,000 rental property, you might be able to deduct $75,000+ in Year 1 instead of the standard $18,000. That's the difference between owing taxes and getting a refund. Get a free estimate here before December 31st. 📊

2. The Expense Acceleration Strategy
Any repairs, improvements, or purchases you make before December 31st can be deducted on your 2025 return. Planning to furnish that STR or do repairs? Do it NOW. According to IRS Publication 527, you can deduct ordinary and necessary expenses in the year they're paid. 🔧

Need to furnish or upgrade your rental? Our partner offers 0% interest financing—basically free money for property improvements. And yes, it counts as a 2025 deduction even if you're paying it off over time. 🛋️

3. The Pre-Payment Opportunity
If you're closing on an investment property in early January but want 2025 deductions, consider prepaying expenses in December (your loan origination fees, points, prepaid interest). Work with your lender and CPA on timing, but this can shift significant deductions into the current tax year. 📅

🎓 Personal Finance Hack: The Credit Card Points Arbitrage

💳 Using Real Estate Transactions to Mint Rewards

Here's a strategy sophisticated investors use that most people don't even know exists: strategically timing credit card spending around real estate transactions to maximize signup bonuses. 🎯

How It Works: Many premium credit cards offer signup bonuses worth $500-$1,000+ if you spend $3,000-$5,000 in the first 3 months. Real estate transactions involve hefty expenses: appraisal fees, inspection costs, moving expenses, furniture, renovations. 💰

The Strategy:

  • Timing is Everything: Apply for a new rewards card 1-2 weeks before closing. According to NerdWallet's analysis, this gives you approval time while positioning you to hit spending thresholds with transaction-related expenses.
  • Stackable Expenses: Appraisal ($500), inspection ($400), moving company ($2,000), furniture ($3,000), minor renovations ($5,000). Boom—you've hit multiple signup bonuses across different cards. 🎪
  • The Property Improvement Play: Many contractors accept credit cards. That $10,000 renovation? Split it across 2-3 cards with pending signup bonuses. You're doing the work anyway—might as well earn $2,000+ in rewards. 🔨

Real Example: You close on an investment property. You open 3 cards over 3 months (Chase Sapphire Preferred, American Express Gold, Citi Premier). Between closing costs, furnishing, and repairs, you naturally spend $15,000. Those three signup bonuses just netted you $2,000-$2,500 in value—essentially a free vacation or extra cash flow. ✈️

Critical Rules:

  • Never carry a balance—interest kills the strategy. Pay in full monthly. 💯
  • Space out applications (every 2-3 months) to avoid tanking your credit score. According to FICO, multiple inquiries in a short period can ding your score. ⚠️
  • Only spend what you'd spend anyway—don't manufacture purchases just for bonuses. 🚫
  • Track redemption values carefully. Some points are worth 2x+ when used for travel vs. cash. 🧮

Next-Level Move: If you're buying furniture/furnishings for an STR through our 0% financing partner, you get interest-free terms PLUS you can still put the initial charges on a rewards card before using the financing. Double-dipping at its finest. 😎

📊 Market Intel: What's Happening Right Now

Let's cut through the holiday cheer with some real talk about the current market:

Inventory is Holding Steady
According to Realtor.com's latest data, inventory levels are actually up compared to this time last year. More options for buyers, which means slightly more negotiating room. It's not a buyer's market yet, but it's less of a seller's market than it was 18 months ago. ⚖️

The Holiday Slow-Down is Real
Transaction volume always drops in December—people are distracted, moving during holidays sucks, and sellers often pull listings. But here's the flip side: serious sellers still on the market are typically motivated. They need to close for tax reasons, relocations, or other timing factors. Translation: deals exist if you're actually looking. 🔍

Rates Stabilizing in the Low-6s
We're seeing rates hover between 6.00-6.50% depending on credit, down payment, and property type. This is roughly where Freddie Mac's economists expected we'd be for year-end. Not exciting, but predictable beats volatile. 📈

🎯 Should You Wait for 2026 Rates?

Everyone keeps asking: "Will rates be lower in 2026?" Here's the honest answer: maybe. 🤷

The Fed has signaled potential rate cuts next year, but mortgage rates don't automatically follow Fed moves. They track the 10-year Treasury yield, which moves based on inflation expectations, economic growth, and global market forces. According to Fannie Mae's latest forecast, they're projecting rates in the mid-6s for early 2026—not dramatically different from today. 📊

But here's the thing: even if rates drop 0.5%, home prices historically rise when rates drop because more buyers enter the market. You might save $150/month on interest but pay $20,000 more for the house. It's often a wash. 🔄

The smarter play? Buy when you find the right property at the right price. You can always refinance later if rates drop significantly. But you can't go back in time and buy that perfect investment property some other investor snagged while you were waiting for "better conditions." ⏰

🎯 Your Year-End Action Plan:

Still have 13 days to make moves that matter:

🌟 The Bottom Line

December 18th—exactly one week before Christmas—is a weird time to be thinking about mortgages and real estate. Most people are focused on gifts, travel plans, and whether they bought enough eggnog. But that's precisely why smart investors and buyers pay attention right now. 🎄

Rates at 6.22% aren't going to make headlines, but they're solid. The market is quiet, which means less competition and more room to negotiate. Year-end tax strategies can save you serious money if you move quickly. And while everyone else is watching holiday movies, you could be setting yourself up for a profitable 2026. 📺→💰

Plus, you know what's more expensive than a 6.22% mortgage? Regret. Regret costs nothing upfront but charges interest for years. The perfect time was yesterday. The second perfect time is today. The third perfect time... well, you get the idea. 🕐

Stay focused, stay informed, and remember: while everyone else is shopping for stuff they don't need with money they don't have, you're building actual wealth. That's the real gift. 🎁

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Disclaimer: This newsletter is for informational and entertainment purposes only. Rates and terms vary by lender and borrower qualifications. Mortgage products, tax strategies, and credit card rewards programs should be evaluated based on your specific financial situation. Always consult with licensed mortgage professionals, tax advisors, and financial planners before making decisions. The strategies discussed may not be suitable for everyone and carry various risks. Past performance doesn't guarantee future results.