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 approaches.
Key Takeaways
- The average 30-year fixed-rate mortgage has fallen to 5.98%, the lowest in over three years.
- This rate drop, combined with improving home inventory, is expected to invigorate the spring housing market.
- Despite a recent dip in housing affordability, projections indicate improvement in the coming months.
A Milestone for Homebuyers
The average rate for a 30-year fixed-rate mortgage has officially fallen below 6%, settling at 5.98%. This marks a significant psychological boundary and the lowest point seen since September 2022. This decline follows a trend from the previous week, where rates had already reached a low of 6.01%. A year ago, the average rate stood considerably higher at 6.76%.
Expert Outlook on Market Impact
Freddie Mac Chief Economist Sam Khater highlighted the significance of this rate drop. "For the first time in three and a half years, the 30-year fixed-rate mortgage dropped into the 5% range, falling even lower than last week’s milestone," Khater stated. He added that this rate, coupled with an increase in available homes for sale, is expected to attract more potential buyers into the market for the upcoming spring season.
Housing Affordability Trends
While mortgage rates are trending downwards, the Mortgage Bankers Association (MBA) reported a decline in housing affordability in January. The national median payment for housing increased from $2,025 to $2,070, the first rise in seven months. However, the MBA anticipates an improvement in affordability moving forward.
Edward Seiler, MBA’s associate vice president of housing economics, noted that despite an increase in the median purchase application amount from $320,000 to $332,000, the overall decline in mortgage rates is a positive factor. "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," Seiler commented.
Mortgage Application Activity
In separate data, the MBA reported an increase in mortgage applications for the week ending February 20. The Market Composite Index saw a slight increase of 0.4% week-over-week, largely driven by a surge in refinances. The Refinance Index was up by 4% week-over-week and an impressive 150% year-over-year. Conversely, the seasonally adjusted Purchase Index experienced a 5% decrease week-over-week.