Housing News

Mortgage Rates Flirt with Falling Below 6%

Mortgage interest rates fell to their lowest level since September of 2022, flirting with dipping below 6%.

Interest rates averaged 6.01% for 30-year, fixed-rate loans in the week ending Feb. 19, according to Freddie Mac. That was a drop from 6.09% in the previous week and was down from 6.85% a year ago.

“Lower rates should improve affordability and bring out more buyers,” said Bright MLS Chief Economist Lisa Sturtevant. The multiple listing service covers the mid-Atlantic region. “If rates fall below 6%, that could be the psychological push that some buyers are waiting for.”

Once mortgage rates fall into the 5% range, more buyers are expected to head into the housing market. This includes existing homeowners who plan to buy their next home, leading to more homes going up for sale.

Homeowners who plan to stay put could also benefit from lower rates by refinancing their mortgages to lower their monthly housing payments.

“This lower rate environment is not only improving affordability for prospective homebuyers, it’s also strengthening the financial position of homeowners,” said Freddie Mac Chief Economist Sam Khater in a statement.

Someone buying a $400,000 home with 10% down could potentially save about $176.21 a month if interest rates fell from 6.85% to 6.01%. Over a year, they would save roughly $2,115.

That adds up to nearly $63,500 over the life of a 30-year, fixed-rate mortgage.

Those who refinance their loans could save a similar amount.

Lower rates could help explain why homebuyers submitted 8% more mortgage applications in the week ending Feb. 13 than they did a year earlier, according to the Mortgage Bankers Association (MBA).

Refinance applications were up 132% from last year. 

“Assuming mortgage rates remain at about where they are, or come down even further, we should see more buyers this spring as both [housing] inventory and the weather improves,” Sturtevant said in a statement.