Demand for purchase mortgages has been stronger than a year ago for more than two months as mortgage rates stay well below 2025 highs seen in January, lender surveys show.
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Homebuyer demand for purchase loans picked up last week as mortgage rates remained stable and for-sale inventories ticked up in many markets, according to a weekly survey of lenders by the Mortgage Bankers Association (MBA).
The MBA’s Weekly Mortgage Applications Survey showed requests for purchase loans were up by a seasonally adjusted 2 percent last week when compared to the week before, and 9 percent from a year ago.
Joel Kan
“Overall purchase activity has shown year-over-year growth for more than two months as the inventory of existing homes for sale continues to increase, a positive development for the housing market despite the uncertain near-term outlook,” MBA Deputy Chief Economist Joel Kan said in a statement Wednesday.
Purchase loan applications came in last week at the highest level since the end of January, Kan said, driven by a 3 percent increase in requests for conventional loans eligible for guarantee by Fannie Mae and Freddie Mac. Applications for FHA and VA purchase loans were down 2 percent.
While applications to refinance were up 57 percent from a year ago, they were down 6 percent week over week, demonstrating that homeowners “remain very sensitive to rate movements, as most borrowers have mortgages with lower rates.”
Although there’s uncertainty over how the Trump administration’s threats to impose tariffs on imports will impact inflation and the economy, Fannie Mae economists think mortgage rates have room to come down as the economy cools.
While tariffs are expected to rekindle inflation and slow economic growth, the recent pullback in mortgage rates should provide a “small boost” to home sales, Fannie Mae forecasters say.
Annual inflation, as measured by the Federal Reserve’s preferred metric, the Personal Consumption Expenditures (PCE) price index, has been moving away from the Fed’s 2 percent target.
Mortgage rates stabilized in March
After hitting a 2024 low of 6.03 percent on Sept. 17, rates on 30-year fixed-rate conforming mortgages climbed to a 2025 high of 7.05 percent on Jan. 14. Rates on conforming loans retreated in February and then hovered in the mid-6s for most of March.
Inflation trending up again
Since falling to a 2024 low of 2.1 percent in September, the PCE index climbed to 2.6 percent in December following Trump’s reelection, and stood at 2.5 percent in February, according to data released March 28.
Core PCE, which excludes volatile food and energy costs and can be a more reliable indicator of inflation, rose to 2.9 percent in December and 2.8 percent in February.
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