- The chaos unfolding in financial markets has been exhausting for investors.
- Yet, for fatigued homebuyers, the market mayhem has come with a silver lining: mortgage rates are down.
- The 30-year mortgage rate has dropped for six straight weeks as bond yields have slipped.
A chaotic few weeks for financial markets have produced one perk for weary homebuyers: mortgage rates are falling.
The rate on the 30-year fixed mortgage, the most popular borrowing home loan in the US, dropped as low as 6.6% last week, according to Freddie Mac data. That’s down from a peak of 7% in January, and the lowest the 30-year mortgage rate has been since December.
The 15-year fixed mortgage rate has also declined, dropping to 5.7% last week, down from a peak of 6.2% earlier in the year.
Both rates just logged their sixth consecutive weekly decline.
The slide has led to swelling demand for home loans, with mortgage applications climbing 11% in the week ending March 7, according to the Mortgage Bankers Association. Refinancing activity also surged, the group said. The MBA’s Refinance Index jumped 16% for the week and is up 90% on a year-over-year basis.
“As we enter the spring homebuying season, the purchase index was more than 4 percent higher than a year ago, and activity was up across all loan categories,” MBA vice president and deputy chief economist, Joel Kan, said in a statement.
The decline in borrowing costs has been largely driven by the slide in bond yields, thanks to a risk-off shift in markets as investors sell stocks and scoop up ultra-safe government bonds.
The 10-year Treasury yield, which is a lending benchmark for mortgage rates, fell as low as 4.1% in early March, the lowest it has been since December and down from a peak of about 4.8% in January.
The flight to the market’s safe haven began several weeks ago, as investors eyed growth concerns in the US and the possibility of a recession hitting the economy in 2025.
Those fears picked up steam as Trump plowed ahead with his latest round of tariffs, with the S&P 500’s total market cap decline extending to $5 trillion this week.
Investors are also eyeing the possibility that the Fed could cut interest rates more than anticipated this year in order to boost the economy, which has also impacted borrowing costs.
Markets are pricing in a 60% chance the Fed could cut interest rates another three or more times by the end of the year, up from a 7.4% a month ago, according to the CME FedWatch tool.
