Mortgage rates have dipped below the significant 6% threshold for the first time in three and a half years, according to Freddie Mac’s Primary Mortgage Market Survey. The average 30-year fixed-rate mortgage now stands at 5.98%, a milestone reached just as the crucial spring homebuying season is set to begin.
Key Takeaways
- Average 30-year fixed mortgage rate falls to 5.98%, the lowest in over three years.
- This decline is expected to invigorate the spring homebuying market.
- Despite a recent dip in affordability, experts anticipate improvements due to falling rates and stable home prices.
- Mortgage applications saw a slight increase, primarily driven by refinancing activity.
A Milestone for Homebuyers
The average 30-year fixed-rate mortgage dropped to 5.98%, crossing a key psychological barrier. This marks the lowest rate seen since September 2022, a significant decrease from the 6.76% recorded a year ago. Freddie Mac’s Chief Economist, Sam Khater, expressed optimism, stating, "This rate, combined with the improving availability of homes for sale, is meaningful and will drive more potential buyers into the market for spring homebuying season."
Affordability Trends and Market Outlook
While the Mortgage Bankers Association (MBA) reported a slight decline in housing affordability in January, with the national median payment rising to $2,070, the outlook remains positive. The MBA anticipates affordability will improve in the coming months. Edward Seiler, MBA’s associate vice president of housing economics, noted, "With mortgage rates mostly trending downward, and home-price growth flat or down in many markets, affordability conditions should improve in the months ahead as housing inventory increases."
Mortgage Application Activity
In the week ending February 20, mortgage applications experienced a modest increase. The MBA’s Market Composite Index rose by 0.4% week over week. This uptick was largely fueled by a surge in refinancing activity, with the Refinance Index climbing 4% week over week and an impressive 150% year over year. However, the seasonally adjusted Purchase Index saw a slight decrease of 5% week over week.