Mortgage Rates Today: Drop to 6%, Lowest Since 2022 as Home Purchases Stall

Mortgage rates in the US have fallen to their lowest level since 2022, yet homebuyers remain cautious. As of the week ended February 20, the average contract rate for a 30-year fixed mortgage dropped to 6% from 6.17% the previous week. That marks a second straight weekly decline and the lowest reading since early September 2022.

Source: Mortgage News Daily

Borrowing costs have clearly eased. But has that been enough to revive housing demand?

Rates Fall, But Activity Barely Moves

According to the Mortgage Bankers Association, total mortgage application volume edged up just 0.4% week over week. That followed a stronger 2.8% increase in the prior period.

Refinancing activity led the gains. Applications to refinance rose 4% from the previous week and surged 150% compared with the same week last year. A year ago, rates stood nearly 79 basis points higher, which explains the sharp annual comparison. Even so, refinancing volumes had been unusually low at that time, which magnifies the percentage increase.

In contrast, purchase applications declined 5% during the week. On a yearly basis, they rose 12%, but that growth did not offset the recent pullback. Lower rates may improve affordability on paper, yet buyers continue to hesitate. Why?

Affordability Still Feels Tight

Home prices remain slightly higher than a year ago, and economic uncertainty continues to weigh on consumers. A recent survey shows that roughly 49% of US residents struggle to afford their regular rent or mortgage payments. With Gen Z likely to struggle the most. That statistic highlights ongoing financial pressure despite easing borrowing costs.

Source: Redfin Survey via X

Redfin reported that nearly 40,000 home sale agreements were canceled nationwide in January. That figure equals 13.7% of homes that went under contract, the highest January share since records began in 2017. The cancellation rate stood at 13.1% a year earlier.

Those numbers suggest that some buyers enter contracts but later step back. Concerns about job security, inflation, or broader economic shifts may influence those decisions.

Adjustable-Rate Mortgages Gain Attention

As borrowers look for savings, some turn to adjustable-rate mortgages. The share of adjustable-rate mortgage applications remained above 8% last week. ARM rates sit more than 80 basis points below conforming fixed rates, offering lower initial payments.

Joel Kan, an economist at the Mortgage Bankers Association, noted that this pricing gap provides an incentive for payment-sensitive borrowers or those seeking larger loans. However, adjustable-rate products carry more risk if rates rise later.

Meanwhile, broader credit data shows that adjusted loans to households held steady at 3.0% year over year. Loans to non-financial corporations slowed slightly to 2.8% from 3.0% in December.

Source: MTS Insight via X

A Housing Market At A Crossroads

Mortgage rates have reached levels not seen in nearly four years. That milestone could support refinancing activity in the near term. Yet home purchase demand has not responded with the same enthusiasm.

Will further rate declines unlock more buyer interest? Or will economic uncertainty continue to limit housing momentum?

For now, refinancing benefits from improved conditions, while the broader housing market waits for stronger confidence to return.