Housing News

Housing Market Continues to Heat Up as Mortgage Rates Keep Falling

With Spring just around the corner, the housing market appears to be gathering steam.

Mortgage rates continued falling in the last week, continuing a downward trend that’s lasted nearly two months.

In fact, rates saw the largest weekly decline since September, as the average rate for a 30-year fixed-rate loan fell to 6.63% in the week ending March 6, according to Freddie Mac data.

Last week, rates averaged 6.76%, and a year ago at this time, rates averaged 6.88%.

It also seems that these recent declines are having a real impact on the market, incentivizing more homebuyers and homeowners looking to refinance.

“The decline in rates increases prospective homebuyers’ purchasing power and should provide a strong incentive to make a move,” Freddie Mac Chief Economist Sam Khater said in a statement. “Additionally, this decline in rates is already providing some existing homeowners the opportunity to refinance.”

That’s holding true already, as purchase mortgage applications rose by 9% in the last week, according to new data from the Mortgage Bankers Association.

But that’s nothing compared to how much refinance activity is on the rise.

Refinance applications rose by 37% in the last week and are up 83% from last year, according to MBA. In fact, there were more refinance applications in the last week than there has been since October 2024, when rates were roughly equivalent to where there are now.

And while these mortgage rate declines may not seem huge, they can make a big difference for those looking to buy a home or refinance, according to Lisa Sturtevant, chief economist of Bright MLS, which covers the mid-Atlantic region.

“How much of a difference does a rate drop make to a buyer? It depends, of course, on how big a drop,” Sturtevant said in a statement. “Since the beginning of the year, mortgage rates have fallen by about 40 basis points. On a $400,000 home with a 10% down payment, a drop from 7% to 6.6% saves the home buyer about $100 per month.”

Saving $100 per month works out to $1,200 per year, or $36,000 over the life of a 30-year loan.

“Mortgage rates don’t necessarily have to come down dramatically to entice buyers,” Sturtevant said. “Rather, for buyers who have been sidelined, they just need to be lower than where they have been over the past few months.”