The drop to 5.99 percent on 30-year fixed-rate mortgages in the wake of shifting tariff policies could unlock transactions in select markets in the Midwest and South, according to an analysis from Realtor.com.
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Mortgage rates finally dipped below 6 percent on Monday on 30-year fixed rate loans, matching the lowest level rates have seen since 2022.
The rate drop to 5.99 percent followed a stock market sell-off that had investors move to the relative stability of the bond market, which in turn caused yields to fall, and then mortgage rates to drop.
William Pulte, the director of U.S. Federal Housing, took to X to announce the news.
TAKE THE INMAN INTEL INDEX SURVEY
Mortgage Rates Dip Back Into The 5’s: https://t.co/21neXhdZxh
— Pulte (@pulte) February 24, 2026
The movement was largely a response to recent economic shifts, including renewed uncertainty over tariffs, cooling inflation and a weak fourth-quarter U.S. GDP report.
The drop in mortgage rates is unlikely to be just a blip, in contrast to a fleeting dip below 6 percent in January, according to Mortgage News Daily’s Chief Operating Officer Matthew Graham.
Matthew Graham | Credit: Mortgage News Daily
“This visit to the high 5’s looks more sustainable on paper,” Graham told CNBC. “As long as the broader bond market doesn’t sell-off in any major way, mortgage rates stand a better chance of remaining closer to present levels than they did last time. And if the broader bond market improves further (i.e. 10yr yields dipping under 4.0 percent), mortgage rates would likely make incremental gains.”
Refinance applications will also likely increase now with rates in sub-6 percent territory. Applications to refinance a home were up 132 percent year over year, according to the latest data from the Mortgage Bankers Association.
Where declining rates stand to have the greatest impact
As mortgage rates come down, some select metros in the Midwest and South are poised to experience an “unlocking” of the market, according to data from Realtor.com that analyzed current borrowing costs, the gap between a homeowner’s existing mortgage and the cost of a new loan today, and sales activity.
Those homeowners who hold mortgages that are closer to where rates are approaching today are most likely to have that unlocking potential. For instance, a homeowner who has a mortgage rate in the 4 percent range is more likely to be willing to transact today than a homeowner with a rate in the 3 percent range.
“The closer the market mortgage rate moves to the interest rates held on outstanding mortgages, the more a local market will be ‘unlocked,’ so to speak,” Realtor.com Senior Economist Jake Krimmel said in the company’s report.
Jake Krimmel | Credit: Realtor.com
Nationally, homeowners in most metros have a median mortgage rate between 3 percent and 4 percent. However, in Detroit, Michigan; Cleveland, Ohio; Memphis, Tennessee; Jacksonville, Florida; and Dallas, Texas; the median mortgage rate is estimated to be a bit higher — between 4.1 percent and 4.3 percent — which means those markets could be on the verge of breaking open.
“While we are unlikely to see the mortgage rates in that range for some time, every move closer to parity counts,” Krimmel said.
In Cleveland, a relatively affordable market, even small movements in mortgage rates can make a big difference both psychologically and financially to homeowners, Akron Cleveland Association of Realtors CEO Mike Valerino told Realtor.com. Rate movements would typically first spur move-up buyers to transact, which would then open up more inventory for first-time buyers, Valerino said.
“Our median home price is far below coastal markets, so even a 1 percentage-point rate drop significantly expands purchasing power,” the CEO said. “In higher-cost markets, a rate drop doesn’t move the needle as dramatically because price levels remain the dominant constraint. In Cleveland, rates are the constraint.”
Meanwhile in Dallas, rate movements will play a role in unlocking the market alongside the opening up of inventory in specific, desirable neighborhoods, according to Harrison Polsky of developer Catēna Homes.
“Sellers are very aware that once they leave core neighborhoods, buying back in is difficult,” Polsky told Realtor.com. “The move becomes worth it when the upgrade in lifestyle, location, or long-term value is clearly meaningful and not just incremental.”
“Entry-level housing remains structurally undersupplied,” Polsky added. “What we’d expect to see is more activity in mid-to-upper price points, while highly desirable, established neighborhoods remain tight and competitive.”
Email Lillian Dickerson
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