US mortgage rates drop to lowest level since September 2022, still struggling to stimulate buyer demand.

According to data released by the Mortgage Bankers Association (MBA) last Wednesday, mortgage rates in the United States fell slightly last week to their lowest levels since September 2022, driving a significant increase in housing market refinancing activity. In the week ending February 20, the average rate on a 30-year fixed-rate mortgage in the United States dropped by 8 basis points to 6.09%. The rate on a 5/1 adjustable-rate mortgage fell to 5.23%, also hitting the lowest level since September 2022. A measure of refinancing activity in the housing market rose by over 4%, reaching the second-highest level in the past five months. According to MBA data, refinancing activity has increased in all weeks this year except for two. The MBA's Refinance Index measures "applications for refinancing existing mortgages," which involves repricing and refinancing existing mortgage debt (borrowers/homeowners) rather than new home purchase demand. However, despite a cumulative decrease in mortgage rates close to a quarter of a percentage point since the beginning of the year, the housing market has struggled to gain momentum due to persistently high home prices, concerns about inflation, ongoing economic uncertainty, and consumer worries about unemployment. The decrease in mortgage rates has not yet spurred buyers to enter the market in large numbers, indicating that the U.S. housing market is still struggling to build momentum. The MBA's measure of home purchase applications fell by 4.7% last week, hitting the lowest level since April 2025. At the end of 2025, new home sales in the United States saw a slight rebound, partly due to incentives offered by developers. The resale housing market also performed strongly at the end of the year, bringing hope for a recovery in the real estate market after several years of stagnation. However, this is only one part of the housing market equation, as home prices remain close to historic highs and long-term demand remains weak. Nevertheless, hovering around slightly above 6%, long-term mortgage rates have the potential to attract buyers as the spring selling season approaches. President Donald Trump's request last month for Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities to lower housing financing costs may further contribute to a continued decline in the cost of purchasing homes in the U.S. The MBA survey has been conducted weekly since 1990, using responses from mortgage banks, commercial banks, and savings institutions. The data covers over 75% of all retail residential mortgage applications in the U.S. Overall, financing costs have eased slightly, but the demand for "new transactions" in the housing market has yet to be activated. The U.S. housing market appears to be in a stage of differentiation and repair characterized by a resurgence in refinancing and weak home purchases. According to MBA data, the average rate for a 30-year conforming mortgage contract dropped to 6.09% (the lowest since September 2022), driving the Refinance Index up by +4% on a weekly basis, but purchase applications (seasonally adjusted) decreased by -5%; indicating that the current decline in rates is more focused on "activating repricing of existing debt" rather than immediately translating into new home transactions. Lowe's Companies, Inc., a major retailer of home improvement products and appliances in the U.S., recently announced a weaker full-year performance outlook, further reinforcing the belief that "transactions and large expenses continue to be postponed": the company expects same-store sales to remain flat or grow by only 2%, emphasizing the pressure on the housing market and consumers delaying expensive renovation projects (especially on the DIY end), consistent with cautious homebuying behavior in the context of high mortgage rates above 6% and macroeconomic volatility. Therefore, the latest real estate data from MBA and Lowe's Companies, Inc.'s performance collectively point to a phase of the housing market characterized by "low transaction volume, slow recovery, and greater sensitivity to interest rates": as rates decrease, refinancing and payment pressure relief are initially observed; however, significant revitalization of home purchases and transitions requires stronger "affordability improvements" - such as further rate decreases, more stable income expectations, and reduced macroeconomic uncertainty.