The average interest rate on the most popular 30-year fixed mortgage loan fell to 5.99%, Mortgage News Daily reports, reaching its lowest level since 2022. In February 2025, the interest rate was 6.89%.
The decline in yields is due to a combination of factors, including new uncertainty caused by tariffs, cooling inflation and economic weakness.
While rates briefly dipped into the 5% range for a few hours in January, they recovered the same day. That’s unlikely this time, according to Matthew Graham, chief operating officer of Mortgage News Daily.
The drop in interest rates is likely to spur more refinancing, which has been on the rise in recent weeks. Home loan refinancing applications are about 130% higher than a year ago, according to the Mortgage Bankers Association.
The lower interest rates are a positive sign ahead of the all-important spring housing market. Buyers entering the market today will have more purchasing power than they did last spring.
For example, a buyer who puts down 20% on an average home price of about $400,000, according to the National Association of Realtors, will have a monthly payment of $1,916 in principal and interest. A year ago, that payment would have been $2,105. The $189 difference is significant for some households.
While the difference in monthly payments may not seem like much, more borrowers would qualify for a loan overall at today’s lower interest rates. The Realtors’ chief economist, Lawrence Yun, noted in his January pending home sales report that “With mortgage rates approaching 6%, an additional 5.5 million households that couldn’t qualify for a mortgage a year ago would qualify at today’s lower rates“.
He made the caveat that most newly qualified households don’t act immediately, “but based on past experience about 10% could enter the market – potentially adding approximately 550,000 new homebuyers this year compared to last year“.
So far, mortgage applications for home purchases have not seen a major reaction to lower interest rates. These applications were only 8% higher year-on-year in mid-February.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be found at imot.bg