Little movement in borrowing costs and the potential for even lower mortgage rates by the end of the year could give a badly needed boost to the U.S. housing market.
The 30-year, fixed-rate mortgage averaged 6.64% as of Thursday, virtually unchanged from last week and below the 6.82% from the same week of 2024, according to Freddie Mac, a buyer of loans from banks. The 15-year average of 5.82% fell from 5.89% last week and 6.06% at this time last year.
“Over the last month, the 30-year fixed-rate has settled in, making only slight moves in either direction," Sam Khater, Freddie Mac’s chief economist, said in a statement. "This stability is reassuring, and borrowers have responded with purchase application demand rising to the highest growth rate since late last year."
Late last week, the mortgage giant offered even more optimism for home sales as the industry settles into the all-important spring selling season.
Mortgage rates are likely to fall further into the low 6% range to end this year and next, according to the March 2025 commentary from the Fannie Mae Economic and Strategic Research Group. While the group expects the lower rates to lift home sales in 2025, it said the overall outlook remains modest.
“We think mortgage rates will move even lower within the next quarter and ultimately close the year at approximately 6.3 percent, which could be low enough to generate some extra sales from any would-be buyers still waiting on the sidelines,” Mark Palim, a Fannie Mae senior vice president, said in a statement.
Spring is typically the busiest period in residential real estate as families buy homes to have ample time to move before the start of the new school year, but national homebuilders KB Home and Lennar cut prices in some markets after saying spring sales started slowly.
The daily 30- and 15-year averages, often more volatile than the weekly measure, inched down Thursday afternoon from the previous day to 6.63% and 6.05%, according to Mortgage News Daily.
Mortgage refinancing sees weekly decline
For the week ending March 28, mortgage applications fell 1.6% from the prior week, according to the Mortgage Bankers Association. Mortgage refinancings declined 6% from the previous week but were 57% higher than the same week of 2024.
“Overall purchase activity has shown year-over-year growth for more than two months as the inventory of existing homes for sale continues to increase, a positive development for the housing market despite the uncertain near-term outlook," Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.