30-Year Mortgage Rate Drops to Eight-Week Low, Offering Hope to Homebuyers

Washington, D.C. – The average rate on a 30-year fixed mortgage in the U.S. has declined for the fifth consecutive week, hitting its lowest point since late December, according to mortgage buyer Freddie Mac. The rate fell slightly to 6.85% from 6.87% last week, marking a welcome change for homebuyers in the lead-up to the traditionally busy spring housing market. A year ago, the average rate stood at 6.9%.

Homeowners looking to refinance also saw a slight reprieve, with the average 15-year fixed-rate mortgage dropping to 6.04% from 6.09% last week. Compared to a year ago, when the rate was at 6.29%, the dip could provide some financial relief to borrowers.

Mortgage Rates and Housing Market Trends

Elevated mortgage rates and increasing home prices have posed significant challenges for homebuyers, particularly first-time buyers who lack existing home equity to apply toward a purchase. The ongoing affordability crisis contributed to a decline in home sales last year, with sales of pre-owned homes plummeting to their lowest level in nearly 30 years.

Although the 30-year mortgage rate is at its lowest since December 26, when it also hit 6.85%, it has mostly hovered around 7% for much of this year. Some industry experts remain optimistic, as stability in mortgage rates could encourage both buyers and sellers to enter the market.

“This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season,” said Sam Khater, chief economist at Freddie Mac.

Inventory Growth and Buyer Hesitation

Despite the easing mortgage rates, home affordability remains a pressing issue. The number of homes available for sale climbed last month to its highest level since June 2020, according to data from Redfin. However, high mortgage rates combined with rising home prices continue to discourage many would-be buyers from making a purchase.

This trend is reflected in a recent report by the Mortgage Bankers Association (MBA), which found that mortgage applications fell 5.5% last week to their lowest level since the beginning of the year.

“Purchase activity was higher than year-ago levels, but many prospective homebuyers are waiting for supply and affordability conditions to improve meaningfully before jumping into the market,” said MBA CEO Bob Broeksmit.

Economic Factors Influencing Mortgage Rates

Mortgage rates are closely tied to movements in the bond market and the Federal Reserve’s interest rate policies. The recent decline in rates mirrors a drop in the 10-year Treasury yield, which serves as a benchmark for mortgage pricing.

The yield, which had been as high as 4.79% just weeks ago amid concerns over persistent inflation, fell to 4.5% in midday trading Thursday. This followed the release of data showing an unexpected increase in unemployment benefit applications, raising hopes that the Federal Reserve may ease its monetary policy sooner than expected.

As economic conditions continue to evolve, the trajectory of mortgage rates remains uncertain. However, the recent dip provides a glimmer of hope for buyers and homeowners navigating a challenging housing market.