Phoenix mortgage demand is rising even as rates climb above 7%, signaling continued buyer resilience in today’s market.
As seen on AZFamily Ch. 3
Despite rising borrowing costs in 2023, mortgage demand showed unexpected strength.
After raising interest rates 11 times since early 2022, the Federal Reserve signaled a pause in rate hikes as it continued efforts to control inflation. While this provided some short-term stability, officials also indicated that additional increases could still be on the table.
Mortgage rates—particularly 30-year fixed loans—aren’t set directly by the Fed. Instead, they closely follow the 10-year Treasury yield, which reacts to inflation and broader economic conditions. At the time, mortgage rates hovered around 7.3%, marking some of the highest levels in over 20 years.
Why Buyers Stayed Active in 2023
Even with higher rates, buyers continued entering the market. One key reason is the expectation that home prices would keep rising. Waiting for rates to drop could mean paying more for a home later, offsetting any savings from a lower interest rate.
As local experts explained, interest rates are only part of the equation. Buyers were balancing financial logic with personal timing—such as relocation, family needs, or long-term investment goals.
Refinancing Picked Up as Well
According to the Mortgage Bankers Association, mortgage applications rose more than 5% during this period, with refinance activity jumping even higher.
Many homeowners chose to refinance not to secure a lower rate, but to consolidate high-interest debt like credit cards or auto loans. By tapping into home equity, they were able to reduce their total monthly payments.
Inventory Still Fell Short
In Phoenix, housing inventory saw a slight increase but remained well below demand. Continued population growth and strong migration into the area kept pressure on available housing.
Even with higher mortgage rates, demand remained steady—highlighting the resilience of the housing market during 2023.