Just in time for the spring buying season, average mortgage rates crossed “into the fives,” this past week, their lowest level in years, and one economists describe as a “psychological barrier and numeric threshold” that could bring more buyers into the market despite concerns over the economy.
The latest Primary Mortgage Market Survey® (PMMS®), released by Freddie Mac Thursday, shows the 30-year fixed-rate mortgage (FRM) averaging 5.98%, down from 6.01% the previous week and hitting the lowest level since September 2022.
“For the first time in three and a half years, the 30-year fixed-rate mortgage dropped into the 5% range, falling even lower than last week’s milestone,” said Sam Khater, Freddie Mac’s chief economist. “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.”
Experts point to a number of factors bringing rates down but also caution these same economic uncertainties could still be concerning buyers and holding them back from moving into the market.
“Specifically, the Supreme Court struck down the administration’s broad emergency tariff powers, and the President responded by immediately invoking alternative “Section 122” authority to impose new temporary duties,” said Realtor.com Economist Jiayi Xu. “This legal tug-of-war has triggered a flight to safety among investors, pushing bond prices higher and yields lower, helping mortgage rates settle around 6%.”
However, she said this week’s decline stems from market volatility rather than fundamental economic data, and more supportive economic data is needed to establish a consistent trend.
Also looking at macro-level trends, Bright MLS Chief Economist Lisa Sturtevant, said, “While overall economic numbers appear solid, economic uncertainty is still weighing on the minds of many prospective homebuyers and sellers. In addition to rates moving lower, people also are waiting for signs of stability, both in terms of rates and the economic and political environment. Wildcards like new tariffs, private-sector layoffs, changes in Federal Reserve leadership and potential international conflict could cast a shadow over the sunny lower-rate environment.”
Still, economists note the lowering of rates below 6% may be the psychological barrier needed to be crossed to move some buyers into the market.
“The stabilization of mortgage rates near 6% this spring marks a notable turning point where, for the first time since the post-pandemic spike, both the psychological barrier and the numerical threshold of the 5% range have finally been reached,” said Xu. “Since the national inventory recovery has recently stalled, a lower rate could possibly bring more homeowners who were previously ‘locked in’ to finally enter back into the market.”
Sturtevant added, “Assuming rates stay below 6%, buyers and sellers are going to start getting back into the market. March is when the spring home-buying season typically begins to ramp up and with rates at a three-and-a-half year low, it could be a barn burner of a spring homebuying season.”
To view the Freddie Mac report, click here.
