Mortgage rates have dipped below 6 percent for the first time in more than three years – a psychological boost for America’s battered housing market – but economists caution the relief may be short-lived.
The average rate on the popular US 30-year fixed-rate mortgage fell to 5.98 percent this week, the lowest level since September 2022, down from 6.01 percent last week.
It averaged 6.76 percent during the same period a year ago.
Meanwhile, the 15-year fixed mortgage averaged 5.44 percent, down from 5.94 percent a year ago.
But Jiayi Xu, an economist at Realtor.com, said the dip is unlikely on its own to revive America’s ailing housing market, where many prospective buyers remain priced out by elevated borrowing costs and stubbornly high home prices.
‘As this week’s decline stems from market volatility rather than fundamental economic data, more supportive economic data is needed to establish a consistent trend,’ she said.
The figures were released by Freddie Mac, the government-backed company that supports the US housing market by buying and guaranteeing mortgages.
Sam Khater, Freddie Mac’s chief economist, struck a more optimistic tone than Xu, calling the drop a ‘milestone.’
Mortgage rates have dipped below 6 percent for the first time in more than three years – a psychological boost for America’s battered housing market
‘This rate, combined with the improving availability of homes for sale, is meaningful and will drive more potential buyers into the market for the spring homebuying season,’ he said.
And in a July 2025 analysis, economists at the National Association of Realtors said a 30-year fixed-rate mortgage of 6 percent was the ‘magic number’, making the median-priced home affordable for about 5.5 million additional households, including roughly 1.6 million renters.
The group estimated that if the 30-year rate were to reach 6 percent, about 10 percent of those newly eligible households would likely purchase a home within the next 12 to 18 months. That would translate to roughly 550,000 additional homebuyers entering the market.
The recent drop followed a decline in the benchmark 10-year US Treasury yield after the US Supreme Court on Friday struck down President Donald Trump’s sweeping tariffs.
In response, Trump imposed a 10 percent global tariff before raising the rate to 15 percent. The 30-year fixed-rate mortgage closely tracks the 10-year Treasury yield.
The housing market has become a hot-button political issue as President Donald Trump faces pressure to address cost-of-living concerns ahead of the November midterm elections.
During his State of the Union address on Tuesday, Trump pointed to falling mortgage rates and his move to restrict institutional investors from buying single-family homes as signs that affordability is improving.
The housing market has become a hot-button political issue as President Donald Trump faces pressure to address cost-of-living concerns ahead of the November midterm elections
During his State of the Union address on Tuesday, Trump pointed to falling mortgage rates and his move to restrict institutional investors from buying single-family homes as signs that affordability is improving
‘And the annual cost of a typical new mortgage is down almost $5,000 just since I took office – one year,’ Trump said, arguing that ‘low interest rates will solve the Biden-created housing problem.’
He credited declining borrowing costs for easing financial pressure on buyers and framed the shift as evidence that his economic policies are working.
At the same time, Trump stressed that he wants to maintain rising home values for existing owners.
‘We want to protect those values. We want to keep those values up. We’re going to do both,’ he said – suggesting his administration can make mortgages more affordable for buyers while preserving the wealth of current homeowners.
Economists, however, caution that a persistent shortage of homes for sale – particularly starter homes – continues to weigh on the market.
Many homeowners hold mortgages with rates below 5 percent, creating what is known as a ‘rate lock’ effect that discourages them from selling.
The inventory of previously owned homes also remains well below its pre-pandemic level.
Even so, some bankers and market analysts say the 30-year mortgage rate falling below 6 percent could serve as an important psychological threshold, potentially encouraging more sellers to list their homes and giving buyers greater confidence as the typically busy spring season approaches.
Mortgage refinancing activity has already picked up as rates have declined.
‘That headline alone could prompt many sidelined buyers to take another peek at the housing market,’ said Kara Ng, senior economist at Zillow.
Matt Vernon, head of consumer lending at Bank of America, said any market response is likely to be gradual.
‘In many cases, life events drive decisions more than rates alone, but lower rates could be the nudge some buyers and current homeowners have been waiting for,’ Vernon said, adding that mortgage application volumes at Bank of America are up nearly 22 percent year over year.
Many homeowners hold mortgages with rates below 5 percent, creating what is known as a ‘rate lock’ effect that discourages them from selling
House prices rose 1.8 percent in the 12 months through December after increasing 2.1 percent in November, according to the Federal Housing Finance Agency, which oversees mortgage finance giants Freddie Mac and Fannie Mae.
Last month, Trump ordered the agency to purchase $200 billion in mortgage bonds in an effort to lower borrowing costs.
Economists are skeptical that those purchases will significantly improve housing affordability.
Minutes from the Federal Reserve’s January policy meeting noted that the administration’s bond-buying plans had caused ‘a notable decline in mortgage-backed securities yields.’
However, the minutes added that the move is unlikely to materially boost refinancing ‘because current mortgage rates are well above the weighted average rate of outstanding mortgages.’