Homebuyer Demand Rises Despite Higher Mortgage Rates
- Homebuyer mortgage demand is on the rise, climbing for a second straight week as increasing housing supply appears to outweigh economic concerns, including worries about tariffs.
- The average interest rate for a 30-year fixed-rate mortgage with a conforming loan balance (up to $806,500) edged up to 6.86% from 6.84%, with points steady at 0.68.
- Purchase applications specifically saw a 2% jump for the week and are now 18% higher than a year ago.
Mortgage Demand Rises Amid Increasing Home Supply
Homebuyer mortgage demand is on the rise, climbing for a second straight week as increasing housing supply appears to outweigh economic concerns, including worries about tariffs. The Mortgage Bankers Association reported a 1.1% increase in total mortgage applications last week, based on its seasonally adjusted index.
The average interest rate for a 30-year fixed-rate mortgage with a conforming loan balance (up to $806,500) edged up to 6.86% from 6.84%, with points steady at 0.68. This rate is 22 basis points higher than the same week last year.
Purchase applications specifically saw a 2% jump for the week and are now 18% higher than a year ago. This follows another strong week where purchase applications surged by 11%.
“Despite the economic uncertainty, the increase in home inventory means there are additional properties to buy, unlike the last two years, and this supply is supporting more transactions,” said Michael Fratantoni, chief economist for the MBA.
Fratantoni also highlighted a significant increase in government purchase applications, which rose nearly 5% for the week and 40% year-over-year. These loans are often favored by first-time homebuyers due to their low down payment options.
Redfin reports that total active listings nationally are approximately 14% higher than they were at this time last year,with new listings up 5.5%.
Refinance applications decreased slightly by 0.4% for the week but remain 44% higher than the same week last year. The refinance share of mortgage activity now accounts for 36.4% of total applications, down from 37.1% the previous week.
What’s next
The rise in mortgage demand, fueled by increased housing supply, suggests a potential shift in the market as buyers adapt to economic conditions. Experts will be watching closely to see if this trend continues and how it impacts overall mortgage applications and home sales in the coming months.