WASHINGTON–Mortgage rates broke through a psychological barrier for many this week when the fell below 6% for the first time in more than three years.
The average rate for a 30-year fixed mortgage was 5.98% this week, the lowest level since September 2022 and a slight decline from last week, according to Freddie Mac.
The Freddie Mac data also show the 15-year FRM averaged 5.44%, up from last week when it averaged 5.35%. A year ago at this time, the 15-year FRM averaged 5.94%.
“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,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “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.”
As the CU Daily has been reporting, mortgage rates briefly topped 7% in January, but they have been steadily declining, Inflation has cooled and the Fed has also been reducing rates, which has contributed to the more favorable mortgage pricing.
‘Willing to Do It’
Home shoppers realize that mortgage rates aren’t about to fall below 3% again—as they did during the pandemic-period housing boom—and that between 5% and 6% is the new norm, Bill Banfield, chief business officer at the mortgage company Rocket, told the Wall Street Journal. “So, if you can get into that 5% zone, they’re willing to do it.”
As the CU Daily reported earlier, declining rates have helped fuel refinancings but have done little to spark new homebuying, in part due to a shortage of available homes and a reluctance by many current homeowners to give up mortgages of 3% or less.
Analysts said they are hopeful that lower rates combined with the Spring homebuying season will breathe new life into the market.
