On December 10, 2025, the Federal Reserve cut its benchmark interest rate for the third time this year, lowering the federal funds target range to 3.50%–3.75%. Even more important than the cut itself: the Fed is now projecting only one more cut in 2026.

In plain English:

We’re probably near the bottom of this rate cycle, not the beginning.

For Los Angeles buyers, sellers, and homeowners, that’s a big deal.

Quick Translation: What This Means Right Now

Here’s what’s shifting in real time:

• Borrowing costs are easing. The Fed has now cut rates by 1.75 percentage points since it started this cycle in late 2024, bringing borrowing costs to a three-year low.
• Mortgage rates are off their peak. The average 30-year fixed mortgage is now hovering around the low-6% range nationally (roughly 6.2%–6.3%), down from the mid-7s we saw not long ago.
• But the Fed is tapping the brakes. Officials are signaling a slower pace of cuts next year, not an endless falling-rate environment.

If you’ve been waiting on the sidelines to buy, sell, or refinance, this isn’t a “someday” update.

It’s a right now update.

Where Mortgage Rates Actually Are (Not the 2021 Fantasy)

Let’s reset expectations.

• As of this week, the typical 30-year fixed mortgage rate is in the low-6s nationwide, with many daily surveys clustering around ~6.2–6.3%.
• A year ago, that same average was closer to 6.7–6.8%, and at various points in the last 18 months, we brushed up against (or above) 7.5%.
• Refinance rates tend to run a bit higher than purchase rates, but they’re also pulling back from their peaks.

No, this is not the 2–3% world of 2020–2021. But compared to the “sticker shock” era of 7–8%, today’s rates are materially more affordable—and the Fed is telling us the big drops may already be behind us.

Zooming In: What This Means for Los Angeles

Los Angeles is its own animal.

• Recent data shows the median sale price in LA around the $1M mark, with prices up modestly year-over-year.
• The market is described as “somewhat competitive”: on average, homes receive multiple offers and go pending in about 60 days.
• Nationally, experts expect home prices to keep rising into 2026, thanks largely to low inventory.

Put those pieces together:

• Lower rates + tight LA inventory = a likely surge in buyer demand.

As mortgages get even a bit cheaper:

• More first-time buyers can suddenly qualify.
• Move-up owners who felt “locked in” by their current rate may finally list their homes.
• Investors may re-enter the market as the cost of capital eases.

That’s how you go from “quiet” to crowded open houses and multiple-offer situations—fast.

A Real Payment Example (Because Monthly Numbers Matter)

Let’s say you’re buying a home in LA with an $800,000 loan (very normal here).

Approximate principal & interest payment:

• At 7.25%: about $5,457/month
• At 6.25%: about $4,926/month
• At 5.50%: about $4,542/month

So just moving from 7.25% → 6.25% saves you roughly $530/month.

If rates drift closer to the mid-5s over the next year (which some analysts think is possible), that’s nearly $900/month less than the 7+% world.

That difference:

• Expands your buying power, or
• Frees up cash for renovations, childcare, travel, or simply breathing room.

For Buyers: Why This Window Is So Important

If you’re hoping to buy in 2025–2026 in Los Angeles, here’s what this Fed move means for you:

• Affordability just improved—and may not improve much more.
  • The Fed is now signaling just one more cut next year, not a long slide to zero. Waiting for 3% rates again is probably wishful thinking.
• Competition is likely to increase before prices meaningfully fall (if they fall at all).
  • Most forecasts call for continued price growth into 2026, especially where inventory is tight—exactly the situation in many LA neighborhoods.
• You can always refinance later— you can’t go back in time on price.
  • If you buy when competition is lower, you might:
    • Negotiate better terms
    • Avoid intense bidding wars
    • Potentially refinance if rates tick lower in the future

Our view as a local team:

2026 buyers may wish they’d acted during this 2025–early-2026 “dip” instead of waiting for a perfect scenario that never arrived.

For Current Owners: Sell, Refi, or Stay Put?

If you own a home in LA, there are three main plays to think about.

• You’re in the 7–8% rate camp
  • If you purchased or refinanced in the last few years at a high rate, this is your signal to run the numbers:
    • Purchase rates in the low-6s and refinance rates in the mid-6s could still represent serious monthly savings vs. 7–8%.
    • Even if you don’t refi right now, this may be your moment to sell and trade into a home that better fits your life while keeping your monthly payment in check.
• You have a “golden handcuff” rate (2–4%)
  • You’re not crazy for loving your ultra-low rate. But ask yourself:
    • Does your current home still fit your life for the next 5–10 years?
    • Would a bigger/smaller/different-location home create more value for you than the savings on your current mortgage?
  • Because inventory is still limited and prices are resilient, you may be able to
    • Unlock significant equity,
    • Roll into a new home with a slightly higher rate,
    • And still come out ahead in terms of lifestyle and long-term wealth.
• You’re sitting on a ton of equity, but not using it
  • With LA prices holding up and rates off their peaks, there may be opportunities to:
    • Trade into a multi-unit property
    • Purchase a second home or investment property
    • Use a HELOC or cash-out refi as part of a broader wealth strategy (with guidance from your lender and financial advisor)

Why Waiting for “One More Cut” Could Backfire

It’s tempting to think, “I’ll just wait until they cut again.”

The risk with that strategy:

• By the time the next cut arrives, mortgage markets may have already priced it in.
• If rates fall further, buyer demand will almost certainly spike, pushing:
  • Prices higher
  • Competition higher
  • Days-on-market lower

At that point, even if your rate is slightly lower, you might end up:

• Paying more for the house, or
• Losing out in multiple-offer situations.

In other words, you could win the rate battle but lose the total-cost war.

What to Do Next (This Week, Not “Someday”)

If you’re in Los Angeles and any of this is hitting home, here’s a simple game plan:

• Get a fresh pre-approval (or rate check).
  • Have your lender update your numbers based on today’s rates, not last quarter’s.
• Ask us for a “buy vs. wait” scenario.
  • At Stephanie Younger Group, we can model:
    • Today’s home prices & rates vs. realistic future scenarios
    • Different down-payment options
    • Monthly payment and cash-to-close comparisons
• If you own, request an “equity + options” review.
  • We’ll help you see:
  • What your home could realistically sell for
  • How much equity could you unlock
  • Whether a move-up, downsize, or refi makes sense in this new rate environment
• If you’re even thinking of buying in 2026, start now.
  • That doesn’t mean you have to buy tomorrow. It means:
    • Cleaning up your credit
    • Getting your documents in order
    • Narrowing down neighborhoods and home types so that when the right home shows up, you’re ready.

Bottom Line for LA

The Fed just gave the housing market another nudge by cutting rates again and hinting that this easing cycle is closer to the end than the beginning.

For Los Angeles:

• Rates are better than they’ve been in many months.
• Prices are holding, inventory is tight, and demand is ready to accelerate.
• The current window—where rates are improving but competition hasn’t fully exploded yet—may not last long.

If you want to understand what this moment means for your specific situation in LA, reach out to us. We’ll walk you through your numbers, your timing, and your options—no pressure, just clarity.