Mortgage Rates Have Dropped, But What Does It Mean for Homebuyers?

The Federal Reserve’s recent rate hikes have caused mortgage rates to rise, but they have been trending downward since November.[0] The current rate on a 30-year fixed mortgage is 6.09%, while the 15-year fixed rate is 5.89%.[1] The average rate on a 5/1 ARM is 5.42%.

These lower mortgage rates could open the housing market up to more buyers as the spring home-buying season approaches.[2] According to Freddie Mac, this one-percentage point reduction in rates could allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price.[3]

Despite the decrease in mortgage rates, the mortgage application activity declined last week.[4] This is likely due to the volatility of the housing market, as well as the fact that many people are still on the sidelines since the pandemic began.

The Fed’s rate hikes, as well as market expectations for the economy, have an influence on long-term rates like 30-year mortgages.[5] Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, said, “Investors are betting that the economic slowdown and the Fed’s eventual victory over inflation will result in lower rates over time.”[5]

The mortgage rates could drop even further in the coming months if inflation continues to decline.[6] This could be a major boon for buyers, who have been dealing with a tough housing market with limited inventory, high prices, and bidding wars.[7]

Still, with prices expected to moderate, lower rates, and some sellers offering incentives to buyers, there is hope that 2023 will offer more opportunities for buyers.[8] “Right now might appear more appealing to some buyers because, recently, the housing market has been cooling,” says Jacob Channel, senior economist at LendingTree.[9]

Although it’s hard to predict when and how much mortgage rates will drop, it’s still beneficial to make an offer on a home and sign a mortgage when you find a property that checks off all the right boxes and fits comfortably into your budget.[10] With rates already heading downward, it could be the perfect time to secure a good deal.

0. “Instant Reaction: Mortgage Rates, February 2, 2023”, 2 Feb. 2023,

1. “Today’s mortgage rates for February 6, 2023”, 6 Feb. 2023,

2. “3 Housing Market Predictions for February” Nasdaq, 31 Jan. 2023,

3. “Mortgage Rates Continue to Shift Down – Federal Home Loan (OTC:FMCC)” Benzinga, 2 Feb. 2023,

4. “What 2 Mortgage Numbers Say About Home Buying Right Now” Barron’s, 1 Feb. 2023,

5. “Mortgage rates in the U.S. slip for a fourth week, hitting 6.09%” The Spokesman Review, 2 Feb. 2023,

6. “Inflation is decreasing, and mortgage rates may follow as the Federal Reserve makes smaller rate increases.” NBC Right Now, 30 Jan. 2023,

7. “Housing Market Shows Signs of Thawing – WSJ” The Wall Street Journal, 6 Feb. 2023,

8. “Mortgage Rate Drop Creates a Homebuying Window, but How Long Will It Last?” News, 3 Feb. 2023,

9. “6 leading real estate economists and pros on what to expect from the housing market this winter” MarketWatch, 5 Feb. 2023,

10. “Could Mortgage Rates Dip Below 6% in February?” The Motley Fool, 3 Feb. 2023,