"After the lows of the pandemic years, when the average mortgage was closer to 2.5%, the Federal Reserve began raising interest rates, and mortgage rates surged along with them. At their recent peak, the average rate was around 7.8% in October 2023. Mortgage rates have been on a steady, if tempered decline since the Federal Reserve began cutting its benchmark interest rate, a total of three times last year."
"Last month, President Donald Trump ordered Freddie Mae and Fannie Mac, which guarantee and package mortgages for investors, to purchase $200 billion in mortgages-backed securities. That could explain the continued mortgage rate drop, because the increased demand for loans on the secondary market allows lenders to charge at lower rates."
"Kate Wood, the housing expert for the financial advice website NerdWallet, says the psychological effect of a mortgage below 6% could get more Americans house shopping. Some buyers have held off, waiting for lower rates. And some homeowners have been reluctant to move, which would mean giving up an older, cheaper mortgage."
The average 30-year fixed mortgage rate dropped to 5.98%, marking a significant psychological milestone in the housing market. Rates have declined steadily since the Federal Reserve began cutting interest rates three times last year, following peaks near 7.8% in October 2023. President Trump's order for Freddie Mac and Fannie Mae to purchase $200 billion in mortgage-backed securities has supported this decline by increasing secondary market demand. While still substantially higher than pandemic-era rates around 2.5%, the sub-6% threshold could motivate homebuyers who delayed purchases and homeowners reluctant to leave favorable older mortgages. Housing experts anticipate increased market activity as this psychological barrier is crossed.
Read at www.npr.org
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