Mortgage rates are rising again, but homebuyers are trickling back

Mortgage rates climbed again last week after several weeks of declines, dampening refinance demand but failing to fully suppress a spring homebuying market that's showing signs of life.

Total mortgage application volume fell 1.6 percent week over week, according to the Mortgage Bankers Association. Refinance applications took the biggest hit, dropping as rates moved higher and erased the narrow window that had briefly made refinancing attractive for some borrowers.

But purchase applications told a different story. After months of prospective buyers sitting on the sidelines, homebuyers appear to be accepting the reality of higher rates and re-entering the market. The spring buying season — typically the most active period for home sales — is seeing modest but meaningful pickup in activity.

The dynamic creates a challenging environment for both buyers and sellers. Higher rates reduce purchasing power, meaning buyers can afford less home than they could a year ago. But the limited inventory of homes for sale continues to support prices, preventing the market from correcting to a level that reflects current rate conditions.

For homeowners who secured rates below 4 percent during the pandemic, refinancing at today's levels makes little financial sense. The refinance market is effectively limited to borrowers with older, higher-rate mortgages who are looking for modest savings.

**What This Means For You:** If you're house hunting, the buyers who've been waiting are starting to move — which means more competition for limited inventory. Don't wait for rates to drop; adjust your budget to current realities instead. If you already own a home with a sub-4 percent rate, stay put and enjoy it. If you have a rate above 7 percent, a refinance might save you money, but run the math carefully — closing costs can eat into the savings quickly.