Rates Slip Under 6% — Homebuyers Get a Little Breather

With input form the New York Times, Axios, CNN, FOX Business, CBS News, Market Watch, and the Hill.

Mortgage rates just dropped below the painful 6% line that’s loomed over would-be buyers for years. Freddie Mac’s weekly survey showed the average 30-year fixed mortgage at 5.98%, the first time that number has started with a “5” since 2022. Cue the cautious celebrations.

Why anyone cares: cheaper borrowing gives buyers a bit more buying power and could unstick a housing market that’s been frozen by sky-high rates. For people who watched mortgage costs spike the last few years, this feels like welcome relief — even if it’s not a return to the rock-bottom 2020–21 era.

A few nuts and bolts: rates were north of 7% at the start of last year, so getting under 6% is a meaningful move. Freddie Mac’s chief economist, Sam Khater, called it “meaningful” and said the combo of slightly softer rates and gradually rising inventory could nudge more buyers into the spring market.

That lock-in effect is real. Homeowners who hit pandemic-era rates in the low 3s and 2s have basically sat tight, cutting supply and keeping prices stubbornly high. If rates keep drifting down, some of those owners might finally list — and that would help. Bhavesh Patel at Chase Home Lending says inventory is starting to stabilize in spots, and in some places there are six months or more of homes for sale, which could ease conditions for buyers.

Numbers that matter to pocketbooks: a quarter-point drop in the mortgage rate can let a buyer afford roughly 2.5% more home at the same monthly payment. Zillow’s analysis finds the typical-income household can now afford a $331,483 home — about $30,000 more buying power than a year ago, and roughly 82,300 more homes now fall into that median buyer’s range.

But don’t pop the champagne just yet. Home prices are still near record highs — up roughly 50% since 2020 — and broader economic uncertainty is a brake on activity. Affordability remains a problem for many, especially renters who haven’t enjoyed the asset-price gains homeowners have seen.

There’s also a political angle. President Trump highlighted the dip in mortgage costs during his State of the Union, and the move gives his message a moment in the sun. Still, whether rates keep sliding will depend on bond markets, economic data and Fed moves — all of which can flip the script fast.

Bottom line: getting under 6% is a psychological threshold as much as a practical one. It won’t fix housing’s deep affordability problems overnight, but it might be the nudge some frozen buyers needed to rejoin the market.