About 5.5 million more Americans just became eligible to qualify for a mortgage with the latest dip in rates. The 30-year fixed-rate mortgage dropped to an average of 6.01% this week, opening the door to potentially millions of new home buyers. According to National Association of REALTORS® analysis of U.S. Census data, an additional 5.5 million households can now qualify for a mortgage—households that couldn’t qualify when rates were near 7%. That includes 1.6 million renters who could become first-time buyers due to the lower rates over the past year. Mortgage rates are now at their lowest level since September 2022, Freddie Mac’s latest index reading shows. “This lower rate environment is not only improving affordability for prospective home buyers [but] it’s also strengthening the financial position of homeowners,” says Sam Khater, Freddie Mac’s chief economist. “Over the past year, refinance application activity has more than doubled, enabling many recent buyers to reduce their annual mortgage payments by thousands of dollars.” Mortgage applications for refinancing rose 7% last week and are up 132% from the same week a year ago, the Mortgage Bankers Association reported this week. Despite the improved mortgage rates, however, many potential buyers remain cautious. The housing market, so far, has underperformed this winter: Existing-home sales fell 8.4% in January and are down 4.4% from a year ago. Pending home sales—based on contract signings—barely budged in January, falling 0.4% year-over-year. Mortgage applications for home purchases—a gauge of future home buying—dropped 3% last week and are only 8% higher than a year ago when rates were much higher. “Improving affordability conditions have yet to induce more buying activity,” Lawrence Yun, NAR’s chief economist, said in response to the latest reading on pending home sales. “Most newly qualifying households do not act immediately.” Based on past trends, Yun estimates about 10% of the 5.5 million newly eligible buyers could enter the market—potentially adding 550,000 new home buyers compared to last year. Check out the interactive map below to see how many potential residents could now qualify in your market from the lower mortgage rates. Mortgage Rate Averages This Week Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 19: 30-year fixed-rate mortgages: averaged 6.01%, down from last week’s 6.09% average. A year ago, 30-year rates averaged 6.85%. 15-year fixed-rate mortgages: averaged 5.35%, falling from last week’s 5.44% average. Last year at this time, 15-year rates averaged 6.04%.

Source: Realtor Magazine