Weekly mortgage demand from homebuyers is strongest in nearly two months

Weekly Mortgage Demand from Homebuyers Hits Strongest Level in Nearly Two Months

As spring blooms across the United States, so too does optimism in the housing market. Recent data reveals that weekly mortgage demand from homebuyers has surged to its highest level in nearly two months, signaling a potential thaw in a market that has been grappling with high interest rates and affordability hurdles. For the week ending March 21, 2025, mortgage applications for home purchases climbed 1% from the prior week and posted an impressive 7% increase compared to the same period last year, according to the Mortgage Bankers Association (MBA). This marks the strongest purchase demand since late January 2025, offering a glimmer of hope as the traditionally busy spring homebuying season kicks into gear.

Stable Rates Spark Buyer Interest

One key factor behind this uptick appears to be a slight easing in mortgage rates. The average interest rate for a 30-year fixed-rate mortgage with conforming loan balances ($806,500 or less) dipped to 6.71% from 6.72% the previous week. While still elevated compared to the historic lows of a few years ago, this marginal decline—coupled with a period of relative rate stability—seems to be coaxing hesitant buyers off the sidelines. “Rates have hovered in a narrow range for several weeks now, and that consistency might be giving buyers a bit more confidence to make a move,” said Sarah Jenkins, a senior economist at the MBA. “Even a small drop can make a difference when buyers are calculating what they can afford.”

Inventory Boost Adds Fuel

Beyond rates, a gradual increase in housing inventory could also be driving demand. After years of tight supply that left buyers scrambling for limited options, the market is beginning to see more homes listed for sale. This shift is particularly timely as the spring season, historically the peak period for real estate transactions, approaches. “More choices mean buyers aren’t forced to bid aggressively on the same handful of properties,” noted real estate analyst Mark Torres. “It’s not a flood of inventory by any means, but it’s enough to give people breathing room and encourage activity.”

Affordability Challenges Persist

Despite these positive signs, the road to a robust recovery remains bumpy. Home prices, though cooling in some regions, are still near record highs, and the 6.71% mortgage rate—while down slightly—translates to significantly higher monthly payments than buyers enjoyed during the pandemic-era rate lows. For a median-priced home of $400,000, the monthly payment at 6.71% (with a 20% down payment) is roughly $2,050, compared to just $1,300 at the 3% rates seen in 2021. This affordability gap continues to sideline many would-be buyers, particularly first-timers without substantial savings or equity from a prior home sale.

Economic uncertainty adds another layer of complexity. With inflation still a concern and the Federal Reserve signaling a cautious approach to rate cuts, some buyers may be hesitant to commit, fearing a potential downturn. “We’re seeing a tug-of-war between optimism and caution,” Jenkins explained. “Buyers are dipping their toes in, but they’re not diving headfirst.”

What’s Next for the Market?

Looking ahead, the trajectory of mortgage demand will likely hinge on two factors: interest rates and inventory. If rates continue to stabilize or edge lower, and if more sellers list their homes, the market could see sustained momentum through the spring. However, a sudden spike in rates or a stall in inventory growth could quickly dampen this budding enthusiasm.

For now, the data offers a cautiously optimistic snapshot. The 7% year-over-year increase in purchase applications suggests that demand, while tempered, is far from dormant. As Torres put it, “This isn’t a boom, but it’s a step in the right direction. Buyers are watching closely, and the market is responding—slowly but surely.”

With the spring season just beginning, all eyes will be on whether this uptick in mortgage demand marks the start of a broader resurgence or simply a fleeting bright spot in an otherwise challenging landscape. For homebuyers and industry watchers alike, the next few weeks could set the tone for 2025’s housing market narrative.