Residential Real Estate News
U.S. Mortgage Rates Drop Below 6 Percent, First Time Since 2022
Igniting a Refinance Surge Ahead of Spring Housing Season
The average rate on a 30-year fixed loan fell to 5.99% this week, matching its lowest level since 2022. A year ago, borrowers faced rates closer to 6.9%, underscoring how sharply financing costs have eased in recent months.
The pullback is already reigniting refinancing activity. Applications to refinance a home loan have surged roughly 130% compared with the same period last year, data from the Mortgage Bankers Association show. Many homeowners who were sidelined by last year's elevated borrowing costs are now moving quickly to lock in savings, particularly those who purchased or refinanced when rates briefly spiked.
For buyers, the decline translates into a measurable improvement in affordability -- though not yet a decisive shift in demand.
Based on the latest median existing-home price of about $400,000, as reported by the National Association of Realtors, a purchaser making a 20% down payment would face a monthly principal-and-interest payment of roughly $1,916 at today's 5.99% rate. At last year's average of 6.89%, that payment would have been approximately $2,105 -- a difference of nearly $190 per month.
The improvement in purchasing power comes at a pivotal moment for the housing market, which traditionally sees its strongest activity in the spring. Lower borrowing costs could help offset still-elevated home prices and constrained inventory in many regions.
Yet the rebound in refinancing has not been matched by a comparable surge in home-purchase demand. Mortgage applications to buy a home were up only about 8% from a year earlier as of mid-February, suggesting that affordability challenges and limited supply continue to temper buyer enthusiasm.
The divergence highlights the current housing dynamic: existing homeowners are seizing an opportunity to reduce monthly payments, while prospective buyers remain cautious, weighing improved financing conditions against high property values and broader economic uncertainty.
Whether sub-6% rates will be enough to meaningfully accelerate home sales may depend on how long borrowing costs remain at these levels -- and whether sellers respond by bringing more inventory to market in the months ahead.
