Here's some great news if you're in the market to buy a home: mortgage rates have dropped to their lowest point in months.
The current average rate for a 30-year fixed mortgage is 5.99%, dipping below 6% for the first time since September, according to Mortgage News Daily.
A statement from the Federal Reserve that inflation had "eased somewhat" sent mortgage rates dropping by nearly a quarter-point this week -- despite the Fed raising interest rates on Wednesday.
"The Federal Reserve controls short-term rates, but long-term rates, including 30-year mortgage rates are a function of market expectations for the path of the economy," Mike Fratantoni, chief economist and senior vice president at the Mortgage Bankers Association, said in a statement. "Investors are betting that the economic slowdown and the Fed's eventual victory over inflation will result in lower rates over time."
While it's the fourth week in a row mortgage rates have dropped, it still pales in comparison to where the 30-year fixed-rate was a year ago -- at 3.66%.
Analysts say the rates will likely keep falling, but they warn homebuyers it won't happen overnight.
"Measured steps can continue as long as the economic and inflation data is there to support them. This means rates can make progress down into the 5′s but are unlikely to stampede quickly into the 4′s," Matthew Graham, chief operating officer at Mortgage News Daily, told CNBC. "I’m not saying that won't happen -- just that it would take a bit more time than some of the rate rallies we remember from the past."
Overall rates have dropped more than a point of October's peak of 7.37%.
"This one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price," Sam Khater, Freddie Mac's chief economist, told CNN.
With today's rate, someone buying a $400,000 home with a 20% down payment would have a monthly payment that's $293 less than it would have been in October, CNBC noted.
Waiting to see if the mortgage rate drops even lower could pay off. According to the Knock Buyer-Seller Market Index 2023, the U.S. housing market will cool down after the spring, "moving firmly into buyers' market territory by summer and continuing to trend that way through the end of the year."