"Since peaking (at least for last year) in May 2025, average 30-year mortgage rates have headed downward. We haven't seen averages higher than 6.25% since November 2025, and at the end of February, rates fell below 6%. This wider trend is likely less about the overall economy and more about behind-the-scenes support for the housing market."
"When MBS are being scooped up by institutional investors like Fannie Mae and Freddie Mac, whose goal is supporting the market rather than getting the best return, mortgage lenders can offer lower mortgage interest rates. Lenders know that, even with lower rates, the mortgages will have a guaranteed buyer."
"When mortgage lenders close home loans, they often sell them on the secondary market, where they are packaged as MBS. Selling off the mortgages they've made gives lenders funds to offer new loans. Continued purchases by Fannie Mae and Freddie Mac would allow rates to keep drifting downward."
Mortgage rates have declined significantly since peaking in May 2025, with 30-year fixed rates now starting with fives and falling below 6% by late February. This downward trend is primarily driven by government-sponsored enterprises Fannie Mae and Freddie Mac purchasing increasing amounts of mortgage-backed securities (MBS). These institutions buy bundled home loans from lenders on the secondary market, enabling lenders to offer lower rates while maintaining guaranteed buyers for their mortgages. This market support mechanism mirrors Federal Reserve actions during the pandemic and is expected to sustain downward rate pressure into March without major fluctuations.
#mortgage-rates #housing-market-support #mortgage-backed-securities #government-sponsored-enterprises #interest-rate-trends
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