A change in tariff policy that lowered the interest rate on a 30-year fixed-rate mortgage to 5.99% could open up deals in some markets in the Midwest and South, according to an analysis by Realtor.com.
Mortgage rates finally fell below 6% on 30-year fixed-rate loans on Monday, matching the lowest rate since 2022.
Interest rates fell to 5.99% as investors moved to the more stable bond market as the stock market fell, resulting in lower yields and, in turn, lower mortgage rates.
Federal Housing Commissioner William Pulte announced the news to X.
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Mortgage interest rates return to 5: https://t.co/21neXhdZxh
— Pulte (@pulte) February 24, 2026
The move was largely a response to recent economic changes, including renewed uncertainty over tariffs, cooling inflation and a weak fourth-quarter U.S. GDP report.
Matthew Graham, chief operating officer at Mortgage News Daily, said the decline in mortgage rates, which briefly fell below 6% in January, is unlikely to be just a temporary phenomenon.
Matthew Graham |Credit: Mortgage News Daily
“This High Five visit looks more sustainable on paper,” Graham told CNBC. “Unless the overall bond market declines significantly, mortgage rates are likely to remain closer to current levels than they were last time. And if the overall bond market improves further (i.e., the 10-year Treasury yield falls below 4.0%), mortgage rates are likely to rise gradually.”
Refinance applications in the area with interest rates below 6% may also increase. Applications for home refinancing rose 132% from a year ago, according to the latest data from the Mortgage Bankers Association.
When lower interest rates have the biggest impact
As mortgage rates fall, some large cities in the Midwest and parts of the South are poised to experience an “unlocking” of their markets, according to Realtor.com data that analyzes current borrowing costs, the gap between homeowners’ existing mortgages and current new loan costs, and sales activity.
Homeowners with mortgages near current interest rates are most likely to have that potential. For example, a homeowner with a mortgage rate in the 4% range is more likely to be willing to make a deal today than a homeowner with a mortgage rate in the 3% range.
“The closer market mortgage rates are to the interest rate on mortgage balances, the more local markets become ‘unlocked,'” Jake Krimmel, senior economist at Realtor.com, said in a note.
Jake Krimmel Credit: Realtor.com
Nationally, the median mortgage interest rate for homeowners in most metropolitan areas is 3% to 4%. But in Detroit, Michigan. Cleveland, Ohio. Memphis, Tennessee. Jacksonville, Florida. and Dallas, Texas. Median mortgage interest rates are a bit higher, estimated to be between 4.1 percent and 4.3 percent. This means these markets may be on the verge of a break-open.
“Mortgage rates are unlikely to stay in that range for some time, but anything approaching parity is important,” Krimmel said.
Mike Valerino, CEO of the Akron-Cleveland Association of Realtors, told Realtor.com that in Cleveland, a relatively affordable market, even small changes in mortgage rates can make a big difference, both psychologically and financially, for homeowners. Ballerino said rate fluctuations typically first encourage deals from mark-up buyers, then open up more inventory for first-time buyers.
“Our median home prices are well below coastal markets, so even a 1 percentage point drop in interest rates would significantly increase purchasing power,” he said. “In high-cost markets, the price level remains the primary constraint, so lower interest rates don’t move as dramatically. In Cleveland, interest rates are the constraint.”
Meanwhile, in Dallas, changes in rates will serve to free up inventory in certain desirable areas and open up the market, according to Harrison Polsky of developer Catena Homes.
“Sellers are well aware that once you leave your core area, it’s difficult to buy back,” Polsky told Realtor.com. “Moving is worth it if the upgrades in lifestyle, location, or long-term value are clearly meaningful and not just incremental.”
“Entry-level housing remains structurally undersupplied,” Polsky added. “What we expect is more activity in the mid-to-high price range, but highly desirable and established areas remain tight and competitive.”
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