The average mortgage rate remaining at or around the low 6% range continues to spur buyer activity, but economists warn it may not be enough to create a much-needed market shift in the face of ongoing economic uncertainty and wartime market volatility.
The average mortgage rate ticked up 11 basis points to 6.11% this week, according to the latest Primary Mortgage Market Survey® (PMMS®), released by Freddie Mac Thursday, after last week increasing from 5.98% to 6%.
“Despite the modest uptick, buyers are responding to rates in this range, with existing-home sales increasing 1.7% in February,” said Sam Khater, Freddie Mac’s chief economist. “Purchase applications also increased this week, a welcome sign as buyers enter spring homebuying season with rates down more than half a percentage point compared to the same time last year.”
Realtor.com Senior Economic Research Analyst Hannah Jones pointed to volatility caused by geo-political uncertainty outweighing relatively soft economic data as coinciding with the increase.
“The ongoing conflict in Iran has stoked fears of wartime inflation, sending yields on the 10-year Treasury climbing and driving mortgage rates higher,” Jones said. “This shift comes despite last week’s jobs data being weaker than expected, with unemployment ticking up to 4.4% and nonfarm payroll employment falling by 92,000 jobs. Inflation also drifted lower in February, with headline inflation holding steady at 2.4% and core inflation at 2.5%. Under normal circumstances, these soft economic readings would put downward pressure on mortgage rates. However, the news out of the Middle East is overriding those signals.”
She said the current sense of unease rippling through the housing market feels “strikingly familiar,” echoing the tariff-driven volatility that upended financial markets this time last year.
“While the 2025 spring season didn’t culminate in a full-scale recession, the sheer weight of macro-uncertainty was enough to stifle what should have been a period of growth.”
Looking at the year ahead, Jones said the primary risk is the early-year momentum hitting a wall before it has a chance to gain steam.
“The season began with a clear window of opportunity: mortgage rates reached 3.5-year lows and February pending sales climbed 2.4% year-over-year, signaling a genuine appetite for homeownership. However, the sudden injection of geopolitical friction threatens to curb that enthusiasm. For the market to sustain its ‘pep,’ buyers require more than just favorable borrowing costs; they need the psychological green light provided by a stable economic outlook.”
For the full Freddie Mac report, click here.
