Mortgage rates inch lower - and chip away at the 'lock-in effect' that has hurt home buyers

Andrew Keshner

But there's still a ways to go before rates return to where they were at the start of the war in Iran

This spring has now seen mortgage rates decline for three straight weeks.

Mortgage rates fell for the third straight week, a welcome sign for a housing market challenged by high prices and sellers reluctant to give up their own favorable rates.

The 30-year fixed-rate mortgage declined to an average 6.23% on Thursday from 6.30% one week earlier, according to Freddie Mac. One year ago, it stood at 6.81%.

The average rate hit its lowest point in the last three spring home-buying seasons, according to Sam Khater, chief economist at Freddie Mac (FMCC).

"This improvement, coupled with a pickup in purchase applications and refinance activity, as well as an increase in monthly pending home sales, underscores signs of improving momentum in the market," Khater said.

Last month, mortgage rates climbed amid the Iran war and related inflation worries. Before the start of the conflict, rates were at just under 6%. Mortgage rates tend to follow the yield on the 10-year Treasury note BX:TMUBMUSD10Y.

Meanwhile, there's more good news as the housing industry hopes for a 2026 sales rebound: Many buyers aren't waiting for lower rates - and perhaps just as important, many sellers are finally becoming willing to part with their lower-rate mortgages, according to a new survey of agents at Coldwell Banker Real Estate.

More than one-third of sellers now working with the real-estate firm have mortgage rates under 5% and still want to list their home this spring. Four in 10 agents said the "lock-in" factor was not playing a big role in sellers' decision to put their home on the market.

Mortgage rates plunged early in the pandemic. A tsunami of refinances followed in 2020 and 2021 as homeowners latched on to rates of 3% and lower. That led to a "lock-in" effect, where sellers had to think hard about giving up their low-interest mortgages.

The pull of sticking with a low-rate mortgage is still strong, however. Six in 10 agents said the lock-in effect is playing a major or moderate role in listing decisions.

Still, the results of the Coldwell Banker survey of more than 700 agents, conducted from late March to early April, are another sign that the lock-in effect is loosening. There are now more home loans with rates above 6% than with rates under 3%.

Buyers are also showing thinning patience with trying to time purchases for certain rate levels. Eight in 10 agents are working with buyers who say they aren't waiting for lower rates or certain market conditions.

"The data of the most recent report certainly reflects that life always goes on. At some point, you can't just wait forever," Jason Waugh, president of Coldwell Banker Affiliates, told MarketWatch.

Rates are only one part of the equation for buyers. The biggest roadblock for many people is the upfront acquisition costs, including down payments and inspections, he said.

"The real-estate landscape has returned to a more traditional market in that it is hyperlocal," he said.

For example, it's still a sellers' market in the Midwest and Northeast, according to most Coldwell agents. Meanwhile, markets in the South and the West are buyers' markets, according to roughly half of agents.

-Andrew Keshner

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04-24-26 1115ET