Mortgage rates just crossed a line we haven't seen in more than three years. They're finally below 6%. I'm Kathy Fedke, and this is real estate news for investors.

This is Real Estate News with Kathy Fedke. This week, the average 30-year fixed rate mortgage fell to 5.9%. That's according to Freddie Mac.

It's the first time since rates have dipped below 6% since 2022. That number might not sound dramatic,

but in today's housing market, it is significant. For years, buyers have been facing borrowing costs

above 6% and at times well above 7%.

That created what we've been calling the lock-in effect.

Millions of homeowners refinanced during the pandemic when rates were below 3% and understandably, they've been reluctant to sell.

Trading a 3% mortgage for a 7% one just doesn't make financial sense. That reluctance

kept inventory tight and prices elevated. And it sidelined many would-be buyers. But a rate starting

with a 5 could begin to shift that dynamic. Some lenders say inventory is starting to stabilize,

even rise modestly in certain markets.

In a few areas, there are reports of six months supply, which typically signals a more

balanced market between buyers and sellers. Lower rates also increase buying power.

Even a small drop in rates, about a quarter percent, can allow a buyer to afford roughly two and a half percent more house while keeping the same monthly payment.

And according to a new Zillow analysis, the median income household can now afford a home priced around $331,000.

That's more than $30,000 in additional buying power compared to last year.

Zillow also found that more than 80,000 additional homes have fallen within reach for the typical household compared to a year ago.

That's progress. But affordability still a challenge.

Home prices remain about 50% higher than they were in 2020, and according to the National Association of Realtors,

January marked the 31st consecutive month of year-over-year price increases for existing homes.

So while lower rates help, prices remain near record highs.

There's also a policy balancing act here. President Donald Trump said he

...