Interest rates on mortgages slightly decline this week
High Mortgage Rates Continue to Impact U.S. Housing Market
The U.S. housing market is experiencing a notable transition in mid-2025, with high mortgage rates for 30-year fixed mortgages cooling the pandemic-era boom and leading to slower home sales and affordability challenges for buyers.
According to a report by Freddie Mac's latest Primary Mortgage Market Survey, the average rate on the benchmark 30-year fixed mortgage stands at 6.74%, a slight increase from last week's rate of 6.75%. This elevated rate, compared to last year's average of 6.78%, is limiting affordability and causing many buyers to hesitate or delay purchases.
Meanwhile, the average rate on the 15-year fixed mortgage has decreased this week, falling to 5.87% from last week's rate of 5.92%.
Experts, such as Sam Khater, Freddie Mac's Chief Economist, have stated that the overall backdrop for the housing market is positive, citing the economy's solid employment and income growth as a positive sign. However, the high mortgage rates mean that even with stable or slightly rising incomes, the percentage of income required to cover mortgage payments is higher than in previous low-rate environments, thus affecting affordability and dampening demand.
One topic of discussion has been President Donald Trump's potential decision on capital gains taxes and its impact on the housing market. Katrina Campins, host of 'Mansion Global', discussed this topic with the president, though the exact date of this discussion is not specified.
Key trends in the housing market include median home prices stabilizing, with forecasts suggesting prices will stay flat in Q3 of 2025 and may slightly decline (around 1%) year-over-year by year-end. This stabilization partly reflects sellers adjusting their price expectations amid reduced buyer eagerness.
Housing inventory is also increasing, with active listings up over 33% year-over-year by mid-2025, creating more choices for buyers but also sustaining competitive pressure on prices.
Despite these challenges, market momentum shows signs of building as some buyers return due to increased inventory and selective price reductions. However, overall sales activity remains subdued.
In summary, the persistent high mortgage rates for 30-year fixed mortgages in 2025 have led to a market where homebuyers face affordability pressures, with incomes stretched further by elevated borrowing costs. This dynamic has contributed to a more balanced but slower market with stable or slightly falling prices and more inventory available, offering both challenges and opportunities depending on buyers' financial preparedness and market timing.
[1] Freddie Mac's Primary Mortgage Market Survey, released on Thursday. [2] Discussion with Katrina Campins on 'Varney & Co.'
- The high mortgage rates for 30-year fixed mortgages, as stated in Freddie Mac's Primary Mortgage Market Survey, are causing many buyers to struggle with affordability due to elevated borrowing costs.
- Despite the overall positive economy, these high mortgage rates mean that even with stable or slightly rising incomes, the percentage of income required to cover mortgage payments is higher than in previous low-rate environments, challenging potential homebuyers.
- The U.S. housing market, influenced by these high mortgage rates, is experiencing a slower market with stable or slightly falling prices and more inventory available, offering both challenges and opportunities depending on buyers' financial preparedness and market timing.
- Personal-finance discussions with President Donald Trump, like the one with Katrina Campins, have highlighted the potential impact of capital gains taxes on the housing market, although the exact implications are yet to be seen.
- Investors and homebuyers seeking to navigate this market may find certain strategies beneficial, such as exploring shorter loan terms (like the 15-year fixed mortgage) for lower interest rates or focusing on personal- finance management to increase buying power amid elevated mortgage costs.
