Freddie Mac reports benchmark rate at 5.98%, marking the first sub-6% reading since 2022 and raising expectations of renewed buyer activity.
By yourNEWS Media Newsroom
Mortgage rates fell below 6 percent this week for the first time in more than three years, a development economists say could help draw more buyers into the housing market ahead of the spring season.
The average rate on a 30-year fixed mortgage declined to 5.98 percent for the week ending Feb. 26, down from 6.01 percent the previous week, according to Freddie Mac’s weekly survey. One year ago, the same benchmark averaged 6.76 percent. Freddie Mac said the last time the 30-year rate dipped below 6 percent was in September 2022.
Mortgage rates reached a recent peak of just under 7.8 percent in October 2023 before gradually easing. The decline has offered some relief to prospective buyers facing affordability challenges and to homeowners who have delayed listing properties because they secured lower rates in prior years.
Sam Khater, Freddie Mac’s chief economist, said the latest reading could influence seasonal activity.
“For the first time in three and a half years, the 30-year fixed-rate mortgage dropped into the 5 percent range, falling even lower than last week’s milestone,” Khater 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.”
At Realtor.com, economist Jiayi Xu noted that most mortgage holders remain locked into lower rates, with about 70 percent below 5 percent, but described current borrowing costs as more encouraging than the high-6 or 7 percent ranges seen in recent spring markets.
Lower rates have already increased purchasing power. Zillow reported that a median-income U.S. household can now afford a $331,483 home, roughly $30,302 more than a year earlier. The company estimated that approximately 82,300 additional listings have become affordable compared with last year and said buying power is at its highest level since March 2022, before rates climbed sharply.
“A more than $30,000 gain in buying power is meaningful for households that have been stretched thin by high rates,” said Kara Ng, a senior economist at Zillow, in a statement. “That doesn’t suddenly make this market affordable for everyone, but it does crack open doors that had firmly shut when rates peaked.”
Despite the improved financing conditions, home prices remain elevated. The National Association of Realtors reported that the median price of an existing home reached $396,800 in January, up 0.9 percent from a year earlier. That marked the 31st consecutive month of year-over-year price increases.
The sustained price growth has expanded equity for homeowners, while renters have not experienced comparable wealth gains. President Donald Trump has said he supports efforts to lower interest rates to make homeownership more accessible but has cautioned against policies that could reduce property values.
“I can turn on housing immediately, but you make it too easy and you’re going to knock the value down of people that own houses,” Trump said during a January Cabinet meeting. “For those people—those millions of people that own houses—we’re going to drive those values up, but we’re also going to try making it easier for people to buy.
“People that own their homes, we’re going to keep them wealthy. We’re going to keep those prices up,” he continued. “We’re not going to destroy the value of their homes so that somebody that didn’t work very hard can buy a home.”
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