Mortgage Rate Anxiety Is on the Rise—Here’s Why

If you’ve been keeping an eye on the housing market, you’ve probably noticed a growing sense of uncertainty. Consumers are increasingly concerned about rising mortgage rates, home prices, and rents. According to the latest Fannie Mae National Housing Survey and the University of Michigan’s Surveys of Consumers, inflation expectations surged after President Donald Trump announced plans to impose tariffs on goods from China, Canada, and Mexico.

Joanne Hsu, director of the University of Michigan’s consumer surveys, explains:

“Consumer sentiment fell for the second straight month, dropping about 5 percent to reach its lowest reading since July 2024.”

With inflation concerns mounting and the cost of living rising, many potential homebuyers are wondering if now is the right time to make a move.

How Tariffs Are Impacting Home Prices

One major factor contributing to affordability concerns is the proposed 25% tariff on goods from Canada and Mexico. The National Association of Home Builders has warned that over 70% of imported softwood lumber and gypsum used for drywall come from these countries. If the tariffs move forward, homebuilders could be hit with a 40% duty on Canadian lumber, further driving up construction costs.

Kim Betancourt, a researcher at Fannie Mae, states:

“Consumers seem increasingly pessimistic that housing affordability conditions will improve across the board, as a growing share expects home prices, rent prices, and mortgage rates will all go up.”

With supply chain disruptions and higher costs for materials, builders may struggle to keep up with demand, worsening the already tight housing inventory.

The Rental Market Is Feeling the Heat Too

It’s not just homebuyers who are feeling the squeeze—renters are, too. The latest data shows that 65% of consumers expect rent prices to rise in the coming months.

Even though renting is still relatively cheaper than buying in most U.S. metros, affordability remains a significant challenge. Higher rents, coupled with inflation, could push more people toward homeownership, further intensifying competition in the market.

What’s Next for Mortgage Rates?

After dipping to 6.03% in September 2024, mortgage rates climbed back above 7% in January 2025—a level not seen since May 2024. Many economists predict that rates will remain high throughout 2025, with little chance of significant relief.

Betancourt highlights this challenge:

“We currently expect mortgage rates to end 2025 around 6.5 percent, relatively little changed from where we are today, which will likely continue to hinder relief for housing affordability and home sales activity.”

For homebuyers, this means that locking in a rate sooner rather than later could be a strategic move—especially if rates continue to rise.

While 78% of Americans say it’s a bad time to buy a home, the sentiment around selling remains much more positive. 63% of consumers believe it’s a good time to sell, making now a prime opportunity for homeowners looking to cash in on their equity.

For buyers, market conditions may be challenging, but opportunities still exist. With home prices expected to appreciate by 3.5% in 2025, waiting too long could mean paying even more down the line.

Bottom Line

The real estate market is complex, and while challenges exist, the right strategy can still lead to success. Whether you're looking to buy, sell, or invest, having an expert by your side is essential. At Whitestone Real Estate, we specialize in helping clients navigate market shifts and find the best opportunities in Orange County.

Thinking about making a move? Let’s connect and craft a plan that works for you.

Reference: Carter, M. (2025, February 10). Anxiety over mortgage rates, rent and home prices begins to mount. Inman.