Mortgage prices in the US continue to rise
Expensive mortgages in the US are putting pressure on the real estate market. Refinancing volumes reached their lowest level in the previous three months in March 2025. This is due to an interest rate growth of about 7%. According to Bloomberg, these trends indicate the challenges the market is facing.
The S&P CoreLogic Case-Shiller Index shows that housing prices rose 3.4% in March compared to the same period in 2024. This trend continues. The most notable growth was recorded in New York at 8%. In Chicago, real estate prices rose 6.5%, and in Cleveland, they rose almost 6%. Meanwhile, Tampa, Florida, saw a 2% decline in prices.
Nicholas Godek of S&P Dow Jones Indices attributes the increase in activity to seasonality. However, the market’s dynamics have slowed down on an annual basis.
The mortgage sector remains a key factor influencing the real estate market. The situation is as follows:
– the average interest rate on 30-year loans has risen to almost 7%;
– the refinancing index has fallen by more than 7%;
– the number of new applications for home purchases has increased by 2.7% over the week;
– demand remains low compared to previous months.
In April, the market experienced a brief surge in buyer activity due to a temporary drop in interest rates. Interest rates reached their lowest level in six months. Nevertheless, mortgages remain expensive, limiting the options available to most consumers. Developers are trying to stimulate demand by offering discounts and personalized terms, but this does not always result in sales — many buyers are refusing to purchase.
Mortgage rates in the US are closely linked to Treasury bond yields. Since April, their yields have been rising amid growing concerns about the budget deficit. This has also put pressure on the mortgage market.
Forecasts for the mortgage lending sector
Goldman Sachs analysts predict that mortgage rates will decline slightly by the end of 2025. For 30-year loans, rates could be around 6.8%. While this is lower than the current level, such a decline is unlikely to lead to significant market changes. The high cost of borrowing continues to dampen demand; buyers are reluctant to purchase homes due to expensive mortgages.
At the same time, market supply is increasing. The total value of properties listed for sale has reached a record-high US$700 billion. This is an all-time high for the US real estate market.
Analysts expect housing prices to grow by approximately 3.4% by the end of 2025. In 2026, prices should rise by an additional 3.3%. But high interest rates and inflation will continue to put pressure on the market. Consequently, refinancing volumes are likely to remain low.