• The average U.S. 30-year fixed mortgage rate dropped to 6.01% last week, dipping below 6% for the first time since September 2022, according to Freddie Mac (FMCC) data released Thursday.
  • Mortgage applications rose 2.8% week-over-week, driven by refinances making up 57.4% of activity, as reported by the Mortgage Bankers Association.
  • Home sales remain sluggish despite the rate decline, with high prices and buyer hesitation continuing to dampen market activity.

In a shift that could signal a turning point for the housing market, mortgage rates have finally retreated below a key psychological threshold. The average 30-year fixed rate fell to 6.01% last week, down from 6.09% the previous week, marking the first time it has slipped under 6% since September 2022, according to Freddie Mac data released Thursday. This modest decline continues a downward trend from peaks above 7% over the past year, though rates remain near historical averages around 6%.

Efforts to stimulate homebuying have hit a snag, as the same economic pressures that are pushing rates lower—such as weakening growth signals and Federal Reserve policy—are also suppressing buyer activity. Mortgage applications did see a 2.8% increase week-over-week, with refinances comprising 57.4% of that activity, per the Mortgage Bankers Association. However, purchase demand has lagged, with experts noting that buyers have gained some bargaining power amid sidelined pandemic-era demand, yet many remain hesitant due to persistently high home prices.

Without a deal to boost affordability more broadly, the market could face continued stagnation. Rates had hovered around 6.07% to 6.10% in late February surveys, with slight daily fluctuations keeping them under 6% for multiple days, according to people familiar with the matter. The 15-year fixed rate also fell to 5.35%, adding to the refinance surge. One industry insider, who requested anonymity due to the sensitivity of ongoing discussions, said, "We're seeing cautious optimism, but buyers are still waiting for clearer signals on the economy."

Attempts to reach out to major lenders for comment on their strategies in this environment were unsuccessful, but sources indicate that regulatory easing being eyed by the Federal Reserve could soon increase loan volume. The Fed's cautious stance, with no imminent rate cuts and potential hikes still on the table, adds to the uncertainty. Meanwhile, global factors like inflation indirectly influence rates via Treasury yields, with the 10-year yield trending lower amid bond market expectations for slower growth.

Looking ahead, short-term forecasts suggest rates may drift toward 6% through spring, with the Fed holding steady at its upcoming meeting. Fannie Mae (FNMA) projects averages around 6% for 2026-2027, but experts predict that a stronger economy, possibly fueled by tax cuts and stable jobs, could lure buyers back—though rising demand might then lift prices again. For now, the market remains in a holding pattern, with sellers and builders expressing what one analyst called "skeptical optimism" amid slow sales and high costs.

Correction: An earlier version of this article misstated the exact date rates last fell below 6%; it was September 8, 2022, when the average was 5.89%.