Mortgage Rates Fall Again, But Affordability Still Missing

Mortgage rates have fallen for three consecutive weeks, but homeowners aren’t necessarily jumping into the market as a result.

For the first week of February, the average 30-year fixed-rate mortgage rate was 6.89 percent, according to a report from Freddie Mac. That’s an incremental, though insignificant decrease from the previous week’s average of 6.95 percent.

That’s not far off from where it was at the start of the year, when the average hovered at 6.93 percent. At the time, it was the highest rate in six months, but it continued to rise in the following weeks.

Rates are also higher than they were a year ago. The 30-year fixed-rate average at this time last year was a comparatively minimal 6.64 percent.

The average rate on a 15-year fixed-rate mortgage, meanwhile, is 6.05 percent. That’s down from 6.12 percent the previous week, but up from 5.90 percent a year earlier.

Freddie Mac chief economist Sam Khater noted that mortgage rates “have been stable over the last month and incoming data suggest the economy remains on firm footing.” Khater added that mortgage purchase applications in the last two weeks are up slightly from a year ago, suggesting “latent demand.”

Jonathan Lansner of the Orange County Register forecasted before the start of the year that average mortgage rates would range between 6.15 percent and 7.55 percent this year. That projection was based on 52 years of Freddie Mac data.

Economic eyes are shifting to how President Donald Trump’s policies may affect mortgage rates following his tumultuous and busy return to office.

Economists raised forecasts on near-future mortgage rates after Trump’s election victory in November, as the president’s proposals included significant tariff and tax cuts. Economists expect the costs of tariffs to be passed on to consumers, potentially increasing inflation. Tax cuts, meanwhile, could lower fiscal revenue and raise the national debt, leading to higher long-term interest rates.