Let me be honest—when I first saw that mortgage rates had surged again, I expected homebuyer activity to slow down. But that’s not what’s happening. Despite rates nearing 7%, we’re seeing more buyers enter the market. That’s not just surprising—it’s revealing.

Why Homebuyers Are Showing Up Even as Mortgage Rates Rise and Inventory Grows

According to the Mortgage Bankers Association (MBA), the average 30-year fixed mortgage rate rose to 6.98%—the highest since January 2025 (source: MBA Weekly Applications Survey, June 2025). Despite this, home purchase applications climbed 2% week over week and were 18% higher than the same time last year. Meanwhile, refinance applications dropped by 7%, even though they remain up 37% year over year.

Key Takeaways: What’s Really Driving This Trend?

1. Inventory is Finally Loosening Up

Yes, rates are high—but so is available inventory. More homes are hitting the market, giving buyers options they didn’t have six months ago. As Joel Kan from the MBA notes, “increased housing inventory…has been supporting some transaction volume.” This change is pulling determined buyers off the sidelines.

2. Buyers Are Prioritizing Timing Over Rates

Some buyers are making peace with high rates—betting they can refinance later. Think of it this way: if the right home is available now, many prefer to lock it in rather than wait and risk missing out altogether. This “date the rate, marry the house” mindset is driving momentum, especially among first-time buyers.

3. Refi Demand Is Sensitive—And That’s Expected

Refinancing took a hit because it’s a rate-sensitive transaction. With fewer homeowners holding mortgages above today’s rates, the pool of people who benefit from refinancing is shrinking. A 7% mortgage doesn’t look attractive unless you’re coming from something much worse—which is rare in recent memory.

4. Market Psychology Is Shifting

Surprisingly, strong consumer confidence is helping stabilize market behavior, even if economic indicators are mixed. Buyers may feel more in control, and less reactive, than they did during the volatility of 2023–2024. That confidence shows up in the numbers.

Actionable Advice for Market Players

Homebuyers

• Act Fast if Inventory Opens Up: New listings are driving demand. If a well-priced home hits the market, don’t wait—competition may be lower now than later.
• Consider Adjustable-Rate Options: If you expect to refinance in a few years, an ARM might help you get a lower payment upfront.

Investors

• Watch Demand in Secondary Markets: Rising buyer activity may push investors out of overheated metros and into emerging suburban markets.
• Use Rate Volatility to Negotiate: Sellers are aware of financing challenges. Use that as leverage to negotiate price or credit score.

Sellers

• Price Right, Sell Faster: With buyers being picky, homes that are realistically priced (not aspirationally) are the ones moving.
• Stage for Competitive Advantage: In a market where people still hesitate due to rates, emotional appeal matters more than ever.

Quick Explainer: What Is the Mortgage Bankers Association (MBA) Index?

What is the MBA Weekly Applications Survey Index?

It’s a measure of how many people are applying for new mortgages and refinancing each week. It’s one of the fastest ways to track real-time housing demand in the U.S.—kind of like a pulse check for the mortgage market.

Reader Q&A: What You Might Be Wondering

Is now a good time to buy or should I wait?

If you’ve found the right property and can afford it, buying now with a plan to refinance later could make sense—especially if inventory is improving in your area.

Will mortgage rates keep climbing in 2025?

Rates are unpredictable, but they’re closely tied to inflation and Federal Reserve policy. Many analysts expect gradual stabilization later in 2025.

How can I stay updated without getting overwhelmed?

Follow weekly updates from reliable sources like the MBA, Freddie Mac, or trusted real estate advisors who translate the data into actionable insights.

The Bottom Line

Rising rates may seem like a deterrent, but motivated buyers are adapting. The fact that purchase activity continues to climb—even as refinancing slips—shows us one thing: we’re not in a frozen market. We’re in a recalibrated one.

Reflect on this: Is your market behavior based on fear of rates—or facts on the ground?