Dip in mortgage rate encourages first-time buyers as spring shopping season heats up

The stock market has been down, up and back down as traders reconcile the tariffs President Trump has imposed, paused an threatened.

On Thursday, the Dow Jones Industrial Average closed off more than 1,000 points. The S&P slid 189 and the NASDAQ was down 737 points, or more than 4% of its total.

Despite that volatility, there has been one economic datapoint that has made those seeking to make a move more happy. Mortgage rates were down for the third week in a row – to 6.62% for a 30-year mortgage.

The average rate has mostly trended lower since reaching just over 7% in mid-January. That small change offers a big boost to buying power.

James Flanagan, vice president of community experience for Tri Point Homes says a few tenths of a percent can carry a big influence on buyers.

"A lot of people are realizing, ok, interest rates are where they are. They’re not going to go down, and if they can afford it, they’re starting to get back in the market," Flanagan said.

Combined with incentives and credits – for first-time buyers, teachers, military or a using a preferred lender – Flanagan says buyers see the difference in the bottom line they look at most often: the monthly payment.

People buying a $350,000 townhome in April will pay about $58 less per month. Over a 30-year mortgage, they save almost $21,000.

Michael Terbet, of Terbet Group Real Estate, said, "It’s a matter of affordability and what their monthly payments are."

A recent survey by TD Bank shows 75% of first-time home buyers feel good about entering the real estate market right now.

Flanagan pointed out, "When I was younger, you could get a two-bedroom apartment for like $900. Now you're pushing like $2,000+. So now you go from that to like a $3,000 a month payment. You're really not that far up, and then you're building equity as well."

Mortgage rates are influenced by several factors, including global demand for U.S. Treasurys, the Federal Reserve’s interest rate policy decisions and bond market investors’ expectations for future inflation.

The latest drop in mortgage rates partially reflects the bond market’s uncertainty over the Trump administration’s on-again, off-again tariff policy, which is likely to keep mortgage rates volatile, said Lisa Sturtevant, chief economist at Bright MLS.

Recent forecasts by housing economists generally called for the average rate on a 30-year mortgage to remain around 6.5% this year.

The U.S. housing market has been in a sales slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes fell last year to their lowest level in nearly 30 years.

Easing mortgage rates and more homes on the market nationally helped drive sales higher in February from the previous month, though they were down year-over-year.

Home shoppers who can afford to buy at current mortgage rates may benefit from more buyer-friendly trends this spring homebuying season, including a sharp increase in home listings and lower asking prices in some metro areas.