Borrowers have seen some relief in recent weeks, even if rates remain stubbornly higher than 7%
For a while, it seemed like mortgage rates might never stop climbing – but they’ve now fallen for two consecutive weeks, slipping to their lowest level in over a month and providing at least a grain of relief for borrowers.
At 7.24% this week, according to Freddie Mac’s latest data, the 30-year average fixed rate is still much higher than mortgage shoppers would prefer, and well above where it started the year.
But the downward trend seen in recent weeks is “a step in the right direction” for the mortgage market, according to Edge Home Finance senior mortgage planner Jessica Eddy (pictured top).
She told Mortgage Professional America that while rates remain more than a point above their level from 12 months ago, there was still cause for positivity in the current environment.
“What keeps me optimistic is that we’ve come off the peak and today’s rates are still below the 50-year average of about 7.7%,” she said. “The market is cyclical. Buyers are still moving when the payment and the overall terms work.”
Is affordability set to improve in the coming months?
First American’s chief economist Mark Fleming also highlighted potential good news ahead for homebuyers in the company’s latest Real House Price Index (RHPI).
Household income growth will likely outstrip house price increases in 2027, he said – a likely boost to affordability for many buyers. “When income growth exceeds house price growth, house-buying power improves – even if mortgage rates don’t decline meaningfully,” he said.
That could prove significant in markets where buyers have been priced out not by rates alone, but by the sustained combination of high rates and price appreciation. If wages continue their upward trajectory, some of that affordability gap may begin to close without rates needing to move much at all.
Eddy said her advice in the current market differs by client, but the core advice remains the same: focus on the monthly payment they can live with, rather than on timing the market.
“If the payment works today, waiting for a rate that may not come will cost you the house,” she said. “For the most part we are in a buyer’s market, which means we are seeing price reductions, seller concessions with temporary rate buydowns, the ability to get an inspection, et cetera. All of these can help offset the higher rate.”
For clients who are not yet in a position to buy, she takes a longer view.
“If a buyer is not quite ready to move forward with purchasing, we are making a plan covering credit, downpayment, budget, and so on. I also encourage them not to let a Fed headline drive a housing decision.”
Fed decisions remain a constant talking point
The central bank held interest rates steady after its meeting this week – but while its decisions don’t directly move mortgage rates, industry members have highlighted a constant dialogue with clients to explain that fact.
In fact, prominent mortgage market watchers including MBS Highway chief executive officer Barry Habib say if the Fed continues hiking rates, mortgage rates could actually fall – because central bank action could slow the economy and inflation, pushing bond yields lower.
Buyers who need to move for various reasons – growing families, job transfers, and more – are still pushing ahead in the current market. Others, though, are dissuaded by a variety of factors.
“The people sitting out are usually stuck on one of three things: the payment feels too high, their credit or downpayment needs a plan, or they’re listening to the headlines and getting scared,” Eddy said.
“All three are fixable once someone runs their numbers and breaks down their options so that they can make an informed decision. That’s the conversation I’m having every day. For buyers who are ready, this is a real opportunity to take advantage of the market.”
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