Mortgage rates fell sharply the week of Feb. 23, dipping below 6% for the first time since September 2022 and offering relief to potential homebuyers and those refinancing their home loans.
According to Mortgage News Daily, the average 30-year fixed mortgage rate fell to 5.99% Feb. 23, down from 6.87% at the same time last year. In late 2023, rates climbed to nearly 8%.
The decline stems from a combination of factors. According to CNBC, easing inflation, uncertainty surrounding tariffs, and signs of economic weakness in a recent gross domestic product (GDP) report are all likely contributors.
As the spring homebuying season approaches, the lower rates could provide meaningful relief to the housing market and broader economy. CNBC reported that the drop will likely spur refinancing activity and give buyers more purchasing power compared with recent years.
For example, a buyer putting 20% down on a median-priced home of about $400,000 would pay roughly $1,916 per month in principal and interest at today’s 30-year fixed rate, CNBC reported. By contrast, that same loan at last year’s rate (about 6.87%) would cost about $2,105 per month.
According to the National Association of Home Builders, even a small drop in mortgage rates — such as 0.25 percentage points — can significantly improve affordability and bring more than a million additional households into the market.