US 30-year mortgage rate falls back below 6%

The average US 30-year fixed mortgage rate fell to 5.99% on Monday, tying the lowest level since 2022, according to the Mortgage News Daily Rate Index. Business Insider reports the drop followed a stock-market sell-off that pushed investors into US Treasuries, pulling yields—and mortgage rates—lower.

The move is being read by many households as the start of “better times”, but the mechanism is closer to an emergency brake than a recovery signal. When equities fall, large investors typically rotate into government bonds for safety and liquidity. That buying pressure raises bond prices and lowers yields across the curve. US mortgage rates, which are priced off longer-term Treasury yields plus a spread for credit and prepayment risk, follow the decline. The result is cheaper borrowing that arrives not because incomes are rising or housing supply has improved, but because markets are demanding protection.

That distinction matters for who benefits. Falling rates immediately help existing homeowners who can refinance: the Mortgage Bankers Association shows refinancing applications up about 130% from a year earlier. For banks and mortgage servicers, however, a refinancing wave can be a mixed outcome: it generates fee volume, but it also accelerates prepayments and can compress margins if competition forces lenders to pass through the lower rate environment.

For would-be buyers, the effect is less direct. Pending home sales fell 0.8% in January and were down 0.4% year-on-year, the National Association of Realtors says. NAR’s chief economist Lawrence Yun estimates that with rates near 6%, about 5.5 million additional households now qualify for a mortgage compared with a year ago, but he expects only around 10% to act quickly—roughly 550,000 additional buyers this year. That gap between “qualifying” and “buying” is where the real economy shows up: job security, down-payment constraints, insurance and property tax costs, and the lingering mismatch between prices and wages.

Lower mortgage rates can still keep house prices from correcting. When financing costs fall, monthly payments drop even if the sticker price does not, allowing sellers to hold the line and buyers to stretch. If rates are falling because investors are fleeing risk, the housing market can end up on artificial oxygen: cheaper credit stabilises valuations at the same moment the labour market and corporate earnings are turning less supportive.

A 5.99% mortgage rate looks like relief on a lender’s calculator. It is also the price signal of a market that is buying safety rather than growth.