Mortgage rates declined again this week, reaching their lowest point in nearly three years, though housing market activity continues to show signs of weakness.

Freddie Mac reported that the average rate on a 30-year fixed mortgage fell to 6.01 percent, down from 6.09 percent the previous week. At this time last year, the same loan averaged 6.85 percent.

“This lower rate environment is not only improving affordability for prospective homebuyers, it’s also strengthening the financial position of homeowners,” said Sam Khater, Freddie Mac’s chief economist.

Khater added that refinancing demand has surged compared to last year, noting that applications have more than doubled. That increase has enabled many recent buyers to cut thousands of dollars from their yearly mortgage costs.

Rates on 15-year fixed mortgages, commonly used for refinancing, also moved lower, declining to 5.35 percent — the lowest level recorded since October 2024.

The easing in mortgage rates follows a recent decline in the 10-year Treasury yield, which typically influences home loan rates.

After beginning 2025 near the 7 percent mark, longer-term mortgage rates started to ease in July as investors adjusted expectations in anticipation of Federal Reserve rate reductions.

While the lower rates have modestly improved buying power for consumers, they have not yet translated into a meaningful rebound in home sales.

According to the National Association of Realtors, sales of existing homes dropped 8.4 percent in January compared to December, marking the sharpest monthly decline in almost four years.

Severe winter conditions likely played a role in slowing activity, but elevated home prices also remain a barrier. The median price for an existing home climbed to $396,800 in January — a record for the month — amid continued limited inventory. That figure represented the 31st straight month of annual price increases, NAR reported.

Industry analysts expect mortgage rates to remain in the low-6 percent range throughout 2026, suggesting that additional rate declines may be modest.

Jake Krimmel, senior economist at Realtor.com, cautioned that even if borrowing costs fall further, the persistent shortage of homes could offset any benefit.

“Without a significant return of supply through the easing of the mortgage ‘lock-in effect,’ lower rates may simply reignite competition and spike prices,” Krimmel said.

{Matzav.com}