Borrowers Get Risky as the Spring Home Buying Market Blooms

If you’re thinking about buying a home in 2025, you’re not alone — but you might be feeling pressure.

The good news? Mortgage rates have started to ease a bit. The challenge? Affordability is still a major hurdle, and buyers are having to get creative — and take some risks — to make homeownership a reality.

Let’s break down what’s going on and what it means for you as we head into Spring home buying season.

Mortgage rates are easing, slowly

After a rocky 2024, mortgage rates in early 2025 are lower than this time a year ago (the 30-year fixed rate averaged 6.67% on Mar. 20 versus 6.87% on Mar. 21, 2024, according to Freddie Mac). While they may not have decreased as much as borrowers had hoped, the trend is encouraging.

Recent data from the Mortgage Bankers Association showed that home buying has started to tick upward — an early sign that more house hunters are jumping in as rates remain manageable.

“Purchase application volume is up 6% compared to last year at this time,” said Mike Fratantoni, chief economist at the MBA. “Growing inventories of homes on the market and steadier mortgage rates are supporting home buying activity thus far this spring.”

If rates continue to drop toward 6%, experts expect more homes to hit the market, more sales to close, and a bit more breathing room for buyers. If you’re waiting for the right time, it could be smart to explore your options now — especially before demand increases.

Affordability and creativity

Despite the improvement in rates, home prices remain high. And while the pace of home price growth has leveled off in recent months, it still climbs.

To cope, many buyers are expanding their search criteria. A 71% share of loan officers reported buyers are more willing to take risks — considering homes that need renovation, exploring neighborhoods a bit farther out, or even looking into unconventional financing options like adjustable-rate mortgages or interest-only loans — according to HomeLight.

Buyers are also getting creative in other ways. Multigenerational living — where parents, children, and even grandparents live under one roof — is becoming more common. It’s a way to share costs and make homeownership more feasible.

Accessory dwelling units (ADUs), like in-law apartments or backyard cottages, are also gaining traction. These spaces can be rented out to generate extra income and offset high mortgage payments.

If you’re open to thinking outside the box, there are more paths to ownership than ever—just be sure to run the numbers carefully and talk with a trusted lender about the pros and cons.

Be Aware of Extra Costs

It’s not just about the home price and the mortgage. Property taxes and insurance premiums are climbing, especially in areas prone to natural disasters like floods or wildfires. Be sure to factor these into your budget, as they can make a big difference in your monthly costs. You can also appeal your assessment if you think it came in too high.

The bottom line: Plan, prepare, and partner up

The 2025 market is full of moving parts — lower rates are creating opportunity, but high prices and other costs are keeping things in check. The best thing you can do is prepare early: talk to a lender, understand your financing options, and get clear on what you can realistically afford.

You don’t have to go it alone. A knowledgeable loan officer or real estate agent can help you understand your local market and find creative strategies that work for your unique situation.

The path to homeownership might be bumpier than it used to be, but the right plan still puts it within reach.