U.S. mortgage rates have dropped below 6% for the first time since September 2022, with the average 30-year fixed-rate mortgage at 5.98%, according to Freddie Mac.

The decline follows Federal Reserve rate cuts and a $200 billion mortgage-backed securities purchase ordered by former President Donald Trump, which has allowed lenders to offer slightly lower rates.

While rates are still far above pandemic lows of around 2.5%, experts say the psychological milestone could encourage hesitant homeowners and buyers to enter the housing market.

Mortgage applications rose 2.8% recently, driven mainly by refinancing, while new home loans remain sluggish amid high prices and limited supply, NPR has reported.

Analysts warn that without increased housing construction or more listings, demand fueled by lower rates could push prices higher, potentially offsetting affordability gains.