"Trump-style QE" shows effect! U.S. key mortgage rates approach the 6% mark, hitting a more than three-year low.

As the crucial spring homebuying season approaches, key US mortgage rates have fallen to their lowest level in more than three years.

Data released by Freddie Mac on Thursday shows that the average rate for 30-year fixed-rate mortgages is 6.06%, down from 6.16% last week, marking the lowest level since September 2022. Since that month, mortgage rates in the US have not dipped below the 6% threshold. With adjustable-rate mortgages, US borrowers can now secure rates below 6%, which is considered a psychologically significant barrier.

Lowering borrowing costs is one of the key goals of President Trump’s plan to make housing more affordable. After he announced a $200 billion mortgage-backed bond purchase plan last week, mortgage rates subsequently fell. Persistently high loan rates in recent years have forced many potential buyers and sellers to remain on the sidelines.

Redfin data dating back to 2012 indicates that the number of signed contracts in December fell to the seasonally adjusted historical low, excluding the lockdown period in April 2020.

However, analysts point out that the real question is whether falling mortgage rates are enough to draw still-hesitant buyers back into the market.

In some respects, buying conditions have been improving: inventory has slightly increased, home price growth has slowed, and rates have retreated from about 7% at the start of 2025. Still, many housing experts believe that in order to truly “thaw” the market, mortgage rates need to drop significantly. This is because homeowners with low-rate loans are reluctant to sell and then buy new homes at higher rates.

According to Ice Mortgage Technology, about 70% of borrowers have locked in rates below 5%. Over half have rates below 4%. This means rates would need to fall even further before many homeowners would consider moving.

After accounting for income growth, data from Compass Inc. shows that the affordability of US housing has actually returned to its best level since 2020. But in times of economic uncertainty like the present, buyers tend to be more hesitant. This is a trade-off between lower rates and job insecurity. It remains to be seen which side will prevail in the spring of 2026. The optimistic view is that by the start of spring, market conditions will be much better than at the same time last year.

In addition, the market turbulence caused by the game between Trump and Fed Chairman Powell may not necessarily lead to lower rates. The risk is that if investors start to doubt the Fed’s independence, it could push up US Treasury yields, which are a key anchor for mortgage rates.

Thomas Ryan, North American economist at Capital Economics, said that economic conditions, especially inflation and employment, will be crucial factors in determining the direction of the real estate market. Relying solely on Trump’s bond-buying plan may not help consumers much. “In our view, the $200 billion purchase size is only a drop in the bucket in the vast mortgage-backed securities market—it’s not enough,” he said. The agency expects mortgage rates to stabilize at 6.5% by the end of this year, revising its previous forecast from 6.75%.

It should be noted, however, that there are significant regional differences in the real estate market. In the Northeast and Midwest, where house prices have risen rapidly and inventory is tight, lower rates may actually fuel competition and push prices higher. In relatively weak markets with abundant supply—especially in the Sun Belt—homebuyers will benefit more.

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