Borrowing costs are falling, and more Americans are taking notice.
Mortgage rates rose only for a temporary period earlier this week, due to recent geopolitical tensions and rising oil prices, and the 30-year fixed-rate mortgage remains resilient, now averaging 6% after last week’s brief dip to 5.98%, according to Freddie Mac.
As rates hover near three-and-a-half-year lows, housing affordability is improving, along with Americans’ outlook on the market. A recent HomeServe survey of about 1,000 U.S. adults found that 59% feel more optimistic about the housing market since the rate drop last week, with 25% feeling “much more optimistic.”
Last week, Nadia Evangelou, principal economist and director of real estate research at the National Association of REALTORS®, called rates dropping under 6% a “big psychological and financial milestone” for the housing market. On a $400,000 home, the latest rates translate to a monthly mortgage payment of about $1,910—“a significant improvement from a year ago and puts about $2,000 back into a buyer’s pocket annually,” she had noted.
Market Activity Rises
With rates holding at 6%, the spring market could see momentum. “Rates are down nearly a full percentage point from this time in 2024, spurring activity from buyers, sellers and owners,” says Sam Khater, Freddie Mac’s chief economist.
Refinance activity is way up, jumping 109% annually in the latest week, while purchase applications—a gauge of activity among home buyers—are 10% higher than last year’s pace, the Mortgage Bankers Association reported this week.
Mortgage News Daily reported a brief rise to 6.12% on Monday, but rates had stabilized by Tuesday. The conflict in the Middle East has raised concerns about inflation, oil prices and potentially higher yields, which mortgage rates generally follow through the U.S. 10-year Treasury.
For Now, Potential Buyers Take Notice
The HomeServe survey shows 48% of Americans say rates below 6% make them more likely to consider buying a home in the next 12 months, with 23% saying “significantly more likely.” Still, many potential buyers want even more drops before they’ll move. They indicated that rates would need to drop below 5% to prompt them into more serious purchasing decisions.
Nevertheless, affordability is improving. An analysis of National Association of REALTORS®’ Metro Market Dashboard shows that an additional 5.5 million households now qualify for a mortgage—households that couldn’t qualify when rates were near 7% slightly over a year ago. That includes 1.6 million renters who could become first-time buyers.
Mortgage Rates This Week
Freddie Mac reports the following national averages with mortgage rates for March:
- 30-year fixed-rate mortgages: averaged 6%, up slightly from last week’s 5.98% average. A year ago, 30-year rates averaged 6.63%.
- 15-year fixed-rate mortgages: averaged 5.43%, down from last week’s 5.44% average. A year ago, 15-year rates averaged 5.79%.
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By: Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine and editor of the Styled, Staged & Sold blog.
Source: National Association of REALTORS®.
