The average rate on the benchmark 30-year fixed mortgage fell to 5.98% this week, marking the first time it has dipped below 6% in over three and a half years, according to Freddie Mac's recent Primary Mortgage Market Survey. This decrease from last week’s rate of 6.01% represents a significant drop compared to the 6.76% rate recorded a year ago. The last time rates were below 6% was in September 2022, when it reached 5.89%.
Freddie Mac’s chief economist, Sam Khater, noted that this reduction in mortgage rates, coupled with an improving inventory of homes for sale, could positively influence potential buyers as the spring homebuying season approaches. However, the average rate for a 15-year fixed mortgage saw an increase, rising to 5.44% from 5.35% the previous week.
Several factors impact mortgage rates, including Federal Reserve policies and geopolitical events, although rates do not directly correlate with the Fed's interest rate decisions. Instead, they tend to follow the trends of the 10-year Treasury yield, which stood at approximately 4.02% as of Thursday afternoon. Realtor.com economist Jiayi Xu attributed the recent drop in mortgage rates to a "flight to safety" among investors following a Supreme Court ruling against the Trump administration's emergency tariff powers. Nonetheless, Xu cautioned that this week's decline reflects market volatility and emphasized the need for more stable economic data to establish a lasting trend in mortgage rates.