Mortgage rate averages break 6% for first time in more than three years

Key takeaways

• The average 30‑year, fixed-rate mortgage rate fell to 5.98% as of Thursday, their lowest level since September 2022.
• Economists say rates may hold within a tight range for now as longer‑term interest rates and inflation expectations continue to trend slightly downward.
• Even with lower borrowing costs, weekly mortgage applications remain muted, though experts expect lower borrowing costs to support a more active spring housing market.

Mortgage rate averages fell to a three-and-a-half-year low for the second consecutive week. As of Thursday, the average 30-year, fixed-rate mortgage was down to 5.98%, according to mortgage giant Freddie Mac. It's the first time averages have fallen below 6% since September 2022.

The 15-year, fixed-rate mortgage was higher than a week earlier, averaging 5.44%. That's still lower than a year ago, though, when it averaged 5.94%.

On a daily basis, mortgage rates were similarly low. As of Wednesday afternoon, the 30-year, fixed-rate mortgage stood at 6% and the 15-year, fixed-rate mortgage rate at 5.62%, according to Mortgage News Daily.

Mortgage rates are likely to stay in a narrow range, at least for the immediate future, according to experts.

The mortgage market is dictated by longer-term interest rates and investor expectations about inflation. Brad Case, chief residential economist at Homes.com, suggested that both of those indicators "have been trending down over the next few weeks."

"We'll have to see whether that continues; if it does, it could indicate that investors have ever-so-slightly less confidence in the U.S. economy or ever-so-slightly greater concern about inflation," he told Homes.com News in an email. "But there are no clear signs of threats that could cause mortgage rates to rise substantially."

That consistency has been true on a daily basis this week, too, according to Matthew Graham, chief operating officer at Mortgage News Daily.

"The entire week is very quiet in terms of those potential market movers," he wrote in a Wednesday blog post. "Rates would need to see a shift in important economic reports before committing to their next major move."

Even as borrowing costs have fallen, homeowners and buyers haven't been drawn all the way off the sidelines yet.

Demand for refinances and purchases is still higher than this time last year, but on a weekly basis, there's only been modest change, according to the Mortgage Bankers Association's weekly index. In fact, in the week ended Feb. 20, purchase applications actually decreased compared to a week earlier, even as mortgage rates fell to their lowest average since September 2022.

Despite that mismatch, economists are still hopeful for a more active spring housing market. Lawrence Yun, chief economist at the National Association of Realtors, for example, suggested that even though today's mortgage rates could unlock homeownership for some 5.5 million households, there could be a bit of a lag before lower mortgage rates translate into tangible consumer activity.

"Most newly qualifying households do not act immediately, but based on experience, about 10% could enter the market — potentially adding roughly 550,000 new homebuyers this year compared with last year," he said in a statement last week.

Sam Khater, chief economist at Freddie Mac, said in a statement on Thursday that he foresees a strong spring housing market given the recent changes in mortgage rates.

"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," he said.