Mortgage Rates Drop Below 6%: Time To Buy?
Mortgage rates fell below 6% this week for the first time since 2022. Is this the big break consumers have been waiting for?
According to Freddie Mac’s benchmark rate survey, the weekly average interest rate for a 30-year fixed-rate mortgage was 5.98% as of Feb. 26, its lowest level in more than three years. And while the difference between this week’s rate and last month’s isn’t significant dollar wise (working out $35 less on a $450,000 loan), it can have a psychological impact on both buyers and sellers.
In an emailed comment, Mischa Fisher, Zillow’s chief economist, tells Money that the drop may make sense for many buyers.
“Prices below 6% will create headlines and spark conversation, which may lead to consumers stopping their search and re-engaging,” he says.
Rates below 6% can also help ease foreclosure concerns, which keep homeowners who don’t want to give up their low mortgage rates from considering moving and listing their homes.
“Existing homeowners with mortgage rates in the 4% range can now compare that to rates starting at 5% on their next home, which can be a lot more fun when doing the mental math,” Fisher said.
Adding more inventory to the housing market is an important part of improving affordability because it gives buyers more options, reduces competition and helps keep housing prices stable.
Is now a good time to buy a house?
Mortgage rates are unpredictable and change daily in response to a range of market conditions. There is no guarantee that today’s 5%-plus rate will continue to decline — or that it will not fall further than 6%.
Joel Berner, chief economist for Realtor.com, tells Money in an email that trying to time the market based on valuations may not be fruitful. Instead, the decision to buy a home should be based on your goals and your financial readiness.
“It’s best to bite the bullet when you find a home that meets your needs and your budget, whenever possible,” says Berner.
That said, home buying conditions right now are the best they’ve been in over three years. There are more homes for sale, mortgage rates are much lower than last year and house prices are holding firm.
According to a recent study from Zillow, home buyers received nearly $30,000 in purchasing power between January 2025 and the end of January of this year, when the 30-year rate dropped from 6.96% to 6.10%. During that time, the average mortgage payment decreased by 8.4%. This purchasing power is likely to increase slightly as prices fall in February.
Fisher points out, however, that affordability will vary greatly by market and consumer, so not everyone will be able to take advantage of the rate dip.
“It is still a big challenge for many families, but it is trending in the right way,” he said.
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