Falling Mortgage Rates Add Fuel to Housing Recovery

Borrowing costs are decreasing as home sales are rising, which bodes well for a potentially active spring market.
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Mortgage rates continued to slide this week, adding more fuel to what appears to be a recovering housing market. The 30-year fixed-rate mortgage averaged 6.32% for the week ending March 30, Freddie Mac reported Thursday. Borrowing costs are heading down as major housing indicators, such as existing-home sales, new-home construction and contract signings for home purchases, have been on the rise for the past three months.

“Although there was some calming in the market after the recent bank shock, mortgage rates continued to drop,” says Nadia Evangelou, senior economist and director of real estate research for the National Association of REALTORS®. “Thus, buyers were able to lock in a lower rate by the end of the first quarter.”

The people most affected by shifts in mortgage rates may be baby boomers, who have edged out millennials as the top homebuying force in America, according to NAR’s recent 2023 Home Buyers and Sellers Generational Trends Report. “This demographic shift is bound to be observed in the real estate market for the next decade,” Evangelou says. “About 20 million additional households will be older than 65 by 2030. With nearly 80% of them owning their home, baby boomers have substantially more wealth than younger generations.”

But limited housing options likely will hold some would-be buyers back this spring, says Sam Khater, Freddie Mac’s chief economist. “Over the last several weeks, declining rates have brought borrowers back to the market,” he says. “But as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers.”

Freddie Mac reported the following national averages with mortgage rates for the week ending March 30:

  • 30-year fixed-rate mortgages: averaged 6.32%, down from last week’s 6.42% average. Last year at this time, 30-year rates averaged 4.67%.
  • 15-year fixed-rate mortgages: averaged 5.56%, also down from last week’s 5.68% average. A year ago, 15-year rates averaged 3.83%.