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Mortgage rates have hit a 14-month low.
Freddie Mac’s Primary Mortgage Survey, an ongoing data analysis that tracks average rates for mortgages, revealed on Thursday that rates for 30-year fixed-rate home loans fell to 6.18 percent, marking the first time since October 2024 that they dipped under 6.2 percen.
“The average 30-year fixed-rate mortgage decreased further this week,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Declining rates offer a timely and welcome gift for aspiring homebuyers.”
If you’re a potential or existing homeowner, you’ve likely wondered two things as rates have fallen: Why are they falling, and what should you do about it?
Why are mortgage rates falling?
Direct and indirect factors impact mortgage rates, so there’s no single reason why they’ve fallen from around 7 percent at the start of the year to 6.2 percent now.
In general, home rates drop around this time of the year because home sales are slower and lower rates encourage buyers to get a mortgage and purchase a home. That’s particularly important now, as the housing market left November with the lowest home-sale rate in three decades, according to the National Association of Realtors.
The association’s chief economist, Lawrence Yun, noted that home values are another reason why homeowners aren’t selling, further slowing the market and encouraging lower rates.
Steve Hill, a broker associate with mortgage firm SBC Lending, told The Independent that lenders competing with each other, in addition to Fed rate drops, have helped lower mortgage rates.
What do low rates mean for consumers?
Generally speaking, low rates make homebuying affordable but can also spur more buying, which increases demand and pushes prices up.
However, the average sale price of a home has remained steady in the first six months of the year, according to the Federal Reserve.
That means that the right time to buy a home could be coming soon, Hill said – it’s also possible that mortgage rates could drop below 6 percent leading up to President Donald Trump selecting a new chair for the Federal Reserve.
“I think it’ll be spring or summer before rates drop into the 5s,” he said. “Personally, I see rates floating around in this range until we get a new Fed Chair in May 2026. Rates will probably start dropping 4-6 weeks before that…That would be a great time to lock [in a mortgage rate], because anticipation and excitement will be at a high point. And that’s when rates were best in 2025 – in the two weeks before a Fed rate drop.”
