A Milestone After Years of High Rates (Image Credits: Unsplash)
The average rate for a 30-year fixed mortgage fell to 5.98 percent this week, slipping under the 6 percent threshold for the first time since September 2022.[1][2]
A Milestone After Years of High Rates
Sam Khater, chief economist at Freddie Mac, highlighted the significance of this decline. “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,” he stated.[3][2]
The rate stood at 6.01 percent last week and reached 6.76 percent a year earlier. Economists attribute the recent drop to falling Treasury yields amid stock market volatility. This marks the third consecutive weekly decline, providing relief after prolonged high rates that stalled the housing market.
Previous lows occurred on September 8, 2022, when rates hit 5.89 percent. The shift arrives just as the spring home-buying season approaches, potentially unlocking pent-up demand.
Buyers Gain Purchasing Power
Lower rates directly reduce monthly payments, allowing prospective buyers to qualify for larger loans or stretch further on home prices. Bhavesh Patel, consumer channel executive at Chase Home Lending, noted that such drops enable buyers to “afford more home.” He added that every 0.25 percentage point reduction expands affordability significantly.[4]
Home shoppers now face improved conditions compared to recent years. For instance, on a $400,000 loan, the difference between 6 percent and 5.98 percent saves about $20 monthly, though cumulative effects over 30 years prove substantial.
- Reduced borrowing costs lower barriers to entry for first-time buyers.
- More households qualify under current pricing, per National Association of Realtors analysis.
- Refinancing becomes attractive for those locked into higher pandemic-era rates.
- Spring timing could spur a surge in offers and showings.
Sellers Face Shifting Dynamics
Sellers previously benefited from low inventory and high demand despite elevated rates. The lock-in effect – homeowners reluctant to trade sub-3 percent pandemic mortgages for 7 percent loans – kept supply tight. Recent declines may prompt some to list properties, easing the shortage.
Increased buyer activity could drive up competition and prices in desirable areas. However, economists caution that supply remains the key constraint. Without more construction or listings, demand surges might not fully materialize.[5]
| Period | 30-Year Fixed Rate |
|---|---|
| This week (Feb 26, 2026) | 5.98% |
| Last week | 6.01% |
| One year ago | 6.76% |
| Sept 8, 2022 | 5.89% |
Forecasts Point to Stability Ahead
Forecasts vary but suggest rates will hover around 6 percent through much of 2026. Fannie Mae predicts stability at that level for 2026 and 2027. Morgan Stanley anticipates a further drop to about 5.75 percent later in the year, with modest home price gains.[6][7]
Home sales may gradually improve, though a full boom requires inventory growth. J.P. Morgan Research expects house prices to stall at zero growth this year amid balanced forces.
- Rates at 5.98% mark a three-and-a-half-year low, aiding affordability.
- Buyers benefit most immediately through lower payments and broader options.
- Sellers may see more interest but need to monitor supply trends.
This rate relief offers a pivotal moment for the housing market, potentially thawing frozen activity. Buyers should act swiftly if positioned well, while sellers weigh listing amid rising interest. What impact do you see from these lower rates? Share your thoughts in the comments.