Zillow senior economist Kara Ng said Wednesday this provides a “promising opportunity” for homebuyers who have been waiting on the sidelines ready to pounce once housing market conditions improve. 

Ng also credits low consumer sentiment and economic uncertainty for lower mortgage rates. 

“For now, downside risks stemming from uncertainty over fiscal, labor, and economic policies have continued to push mortgage rates toward the lower levels seen in early December,” Ng wrote. “Right now markets are spooked on economic growth.” Disappointing consumer sentiment survey results also contributed to stocks tanking in late February.

While it’s important to note that consumer sentiment doesn’t have a direct impact on mortgage rates, it does have an “impact on decisions that will,” Phil Crescenzo Jr., a vice president at Nation One Mortgage Corporation, told Fortune. “For example, the Federal Reserve policies are extremely sensitive to consumers’ behaviors. It will always be a step ahead or a step behind as it relates to present-day [mortgage rates].”

While pandemic homebuyers enjoyed sub-3% mortgage rates, new homebuyers have been battling both high mortgage rates and home prices. Mortgage rates peaked at about 8% in late 2023, and have remained elevated in the 6.5% to 7.4% range ever since. According to National Association of Realtors data, the average existing home price in the U.S. is $409,000, over $100,000 more expensive than the average just five years ago. However, some home sellers have started slashing home prices, which is more good news for hopeful homebuyers. 

The dip in mortgage rates “should entice both buyers and sellers back into the market” this spring homebuying season, Ng wrote. That’s because some homeowners have been apprehensive to sell their homes out of a desire to hold onto lower mortgage rates—a phenomenon called “golden handcuffs.” In other words, there’s no real incentive for some homeowners to sell since they’d presumably have to buy a new home at a higher mortgage rate than their current one.

The Mortgage Bankers Association (MBA) has already reported a 20% week-over-week increase in mortgage applications due to the drop in rates. 

“Many buyers this spring face high home prices, limited listings, and ongoing uncertainty about the economy,” MBA president and CEO Bob Broeksmit said in a statement. “Despite these challenges, MBA expects more homebuying in 2025, with purchase originations rising 10% to $1.4 trillion.”

Ng reminds consumers, though, that rates “are not guaranteed to stay low.” 

“The market narrative could easily shift again to upside inflation concerns, and cause mortgage rates to rise again,” she wrote.

Crescenzo said in his experience if the job market weakens or inflation improves—two key factors the Federal Reserve is watching—“we will see some relief in [mortgage] rates in correlation with these moves.”