Housing News

Homebuyers Rejoice: Mortgage Rates Fall Below 7%

After a brief surge, mortgage interest rates are back below 7%. That’s good news for homebuyers stymied by high costs and homeowners eager to refinance their loans.

Mortgage rates averaged 6.96% for 30-year, fixed-rate loans in the week ending Jan. 23, according to Freddie Mac. That’s down from 7.04% in the previous week, but is still up from 6.69% around this time last year.

“After crossing the 7%-mark last week, the 30-year fixed-rate mortgage saw its first decline in six weeks,” Freddie Mac’s Chief Economist Sam Khater said in a statement. “While affordability challenges remain, this is welcome news for potential homebuyers.”

Many real estate experts had predicted mortgage rates would come down once the U.S. Federal Reserve began cutting its short-term interest rates. While mortgage rates are separate from the Fed’s rates, they generally move in the same direction.

However, with a strong economy and inflation proving to be stickier than expected, the Fed may make fewer rate cuts than anticipated. That could keep mortgage rates high.   

“There are no signs suggesting that rates are going to decline significantly any time soon,” Bright MLS Chief Economist Lisa Sturtevant said in a statement. The multiple listing service covers the mid-Atlantic region.

“We are still in a period of economic and political uncertainty,” said Sturtevant. “We should expect mortgage rates to be in the mid- to high-6% range in the weeks and even months ahead.”

Even small drops in mortgage rates can provide financial relief.

For example, every time mortgage rates drop by about half a percentage point, homebuyers may be able to save just over $100 a month on their mortgage payments. (This assumes buyers put down 10% on a $403,267 home.)

“After seeing rates above 7% at the beginning of the year, even small dips in mortgage rates could lead opportunistic buyers to jump into the market,” said Sturtevant.