Mortgage rates in the United States eased this week, hovering near 6%, their lowest average levels since 2022 as policymakers weigh changes that could bring banks back into home lending. The Federal Reserve is considering regulatory adjustments aimed at boosting bank participation in mortgages and servicing. Officials believe stronger bank competition could help reduce borrowing costs in a housing market facing weak demand and high prices. Banks Reduce Mortgage Presence Banks once dominated the US mortgage market, but their role has shrunk over the past decade. In 2008, banks originated at least 60% of US mortgages and serviced nearly all loans. By 2023, banks accounted for about 35% of originations and less than half of servicing, according to Treasury data. Nonbank lenders such as Rocket Mortgage and loanDepot expanded as banks stepped back. These lenders operate under different regulatory frameworks, often at the state level. They also invested heavily in technology and gained market share. Federal Reserve Vice Chair Michelle Bowman told lawmakers that capital rules have limited bank participation. She said, “The capital treatment of mortgage loans and mortgage servicing assets under the U.S. standardized approach has resulted in banks reducing their participation in this important lending activity.” Bowman said regulators are reviewing ways to better align capital requirements with mortgage risk factors. Those factors include loan size and borrower down payments. The proposal would also adjust how mortgage servicing rights are valued on bank balance sheets. How Competition Could Affect Mortgage Rates Today Mortgage rates are largely influenced by Treasury yields and investor demand for mortgage-backed securities. Still, analysts say increased lender competition can trim rates by a few basis points. That reduction may come through lower interest offers or reduced fees. Eric Orenstein of Fitch Ratings said greater bank participation could lower borrowing costs. “We would expect if there is increased competition, they'd be competing more aggressively on rates, and ultimately consumers would be able to pay a lower mortgage rate,” he said. Michael Fratantoni of the Mortgage Bankers Association added that servicing asset values also affect pricing. “The yields on mortgage-backed securities are big drivers of primary mortgage market rates,” he said. “But the value of the mortgage servicing asset is also a component.” Regulatory changes alone are unlikely to return rates to pandemic-era lows. However, modest improvements could help buyers who are waiting for better terms. Mortgage Rates Today for US Homebuyers As of February 27, average US mortgage rates moved lower from the previous week. Freddie Mac reported that the average 30-year rate dipped below 6% this week to 5.98%. That level marks one of the lowest readings since late 2022. One year ago, the average was 6.76%. The 15-year fixed rate declined to 5.45%, while the 5/1 adjustable-rate mortgage fell to 5.45%. Source: X The average 30-year jumbo mortgage rate decreased to 6.26%. Refinance rates show mixed trends, with the 30-year fixed refinance rate at 6.58%, up slightly from last week. At 5.98%, borrowers pay about $71.80 per month in principal and interest for every $100,000 borrowed. A 15-year loan at 5.45% costs about $97.73 per $100,000 borrowed. Adjustable-rate loans offer lower initial payments but can rise after the fixed period ends. Despite lower weekly averages, housing demand remains soft. High home prices and economic uncertainty continue to weigh on buyers. The Federal Reserve has signaled a cautious approach to benchmark rate changes at its March meeting. If regulators ease mortgage capital rules, banks may return gradually. That shift could increase competition and offer some relief in Mortgage Rates Today across the US market.
