Mortgage rates drop after volatile two weeks

·4 min read

Mortgage rates plunged this week, offering a snapshot of the extreme volatility rates have experienced in the last two weeks since the failure of Silicon Valley Bank set off a market panic.

The rate on the 30-year fixed rate mortgage slid to 6.42% from 6.60% the week prior, according to Freddie Mac. In the last 15 days, the rate has seesawed by more than a half-point — following the whiplash of the 10-year Treasury yield — as investors went back and forth on how the Federal Reserve would respond to the unfolding turmoil among banks. On Wednesday, the Fed hiked its benchmark rate by a quarter-point.

The result? Some opportunistic homebuyers locked in those sudden dips in mortgage rates to mitigate some affordability concerns, but overall activity in the housing market remains muted as still-high prices and rates above 6% continue to price many buyers out.

“Home buyers have been very responsive to mortgage rates in recent months; when rates climbed back above 7% earlier this month, it stifled momentum that had been building as rates originally drifted down to start the year,” Zillow Chief Economist Skylar Olsen said in a statement. “Today, falling mortgage rates could thaw what was shaping up to be a fairly frozen spring home shopping season.”

Demand perks up

As mortgage rates eased last week, both purchase and refinance activity picked up for the third week in a row, according to the latest Mortgage Bankers Association (MBA) survey.

The volume of purchase applications rose 2% from one week earlier, the MBA’s survey for the week ending March 17 found. At the same time, refinance demand increased by 5% from the previous week.

Existing home sales also spiked in February by 14.5% to an annualized rate of 4.58 million, the largest monthly percentage increase since July 2020, the National Association of Realtors reported Tuesday. The jump in sales ended a 12-month slide, likely reflecting rates that many of these buyers secured in January when they were on a downward trend.

“Millennials who want to enter into the market, baby boomers who are retiring, all of that is driving demand all at once,” Jessica Lautz, NAR’s deputy chief economist and vice president of research, told Yahoo Finance Live this week (video above). “And so I think that we are going to continue seeing sales rise.”

A real estate sign is viewed outside of a recently sold home, Tuesday, Feb. 21, 2023, in Valrico, Fla. A nearly yearlong homes sales slump and a pullback in prices have done little to make homeownership more affordable.(AP Photo/Phelan M. Ebenhack)
A real estate sign is viewed outside of a recently sold home, Tuesday, Feb. 21, 2023, in Valrico, Fla. A nearly yearlong homes sales slump and a pullback in prices have done little to make homeownership more affordable.(Credit: Phelan M. Ebenhack, AP)

Overall affordability is worse

Despite the few signs of life in the last few weeks, purchase activity remains 36% off from the same week last year, according to MBA.

Mortgage rates need to fall further to revive housing confidence, according to Daryl Fairweather, chief economist at Redfin, which was still near a historic low in March. Fannie Mae’s measure on housing sentiment found that both homebuyers and sellers blamed affordability concerns for the lull in sales activity this spring.

“It’s a really hard time in the market. Overall affordability is worse and keeps getting worse every year,” Fairweather told Yahoo Finance. “This year it's because of high mortgage rates.”

For instance, the buyer of a median-priced home with a 6.65% rate – near last week's rate – would face a monthly payment that’s 49% higher than last year, according to

“Affordability remains an issue, and will as long as home prices remain as supported as they have been – softening of late, but still above already-pricey year ago levels,” Keith Gumbinger, vice president of, told Yahoo Finance. “Mortgage rates remain as elevated as they have been.”

Higher rates also impact homeowners who would like to refinance or trade up. At least 44% of home sellers thought it was a bad time to sell in February, up from 39% the month prior. According to Redfin, 85% of homeowners had a rate below 6% as of September 2022, which makes it unlikely they’d be willing to give that up anytime soon.

That has shown up in refinance activity, which is down 68% from a year ago, according to MBA.

"You'll be selling a house thinking, 'oh my god, we had interest rates at 2%. Now rates are around 6%,'" said Sean Dycus, a real estate agent at Main Street Properties in Charleston, S.C. "Not anyone will give that up. That's a lot of money."

Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.

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