Buyers are more uncertain than ever: Rising interest rates are slowing down the real estate market!

Buyers are more uncertain than ever: Rising interest rates are slowing down the real estate market!

Uncertainty among potential home buyers and property owners in the US has reached a new high. A recent Bank of America survey shows that 60 percent of 2,000 respondents are unsure whether now is a good time to buy a home. This is a significant increase compared to 57 percent last year and 48 percent in 2023. Rising mortgage rates and high real estate prices are adding significant uncertainty, causing many consumers to postpone their purchasing decisions, especially in the spring.

Matt Vernon, head of consumer lending at Bank of America, notes that the start to the spring season is slower than in previous years. This slowdown is compounded by factors such as the volatile interest rate landscape and market uncertainty. However, in the first quarter of 2025, the bank saw a notable 80 percent increase in mortgage applications, boosted by a growing housing inventory and lower long-term bond yields. Despite this positive development, many buyers continue to feel uncertain.

Insights into the market situation

Mortgage rates are rising in line with 10-year U.S. Treasury yields, raising additional concerns about economic conditions. This is influenced by the volatile economic policy and fiscal outlook under the Trump administration, which further drives interest rate volatility.

Of those surveyed, 52 percent believe that the market is currently better than it was a year ago. Nevertheless, three out of four respondents expect property prices and interest rates to fall. This explains why 75 percent of survey respondents are hesitant to proceed with the purchase of a new home. An increase in the expectation of waiting until finding a cheaper opportunity was also noted, with 62 percent in 2023.

The “new normal”

Vernon describes the current interest rate phase of 6 to 7 percent as the new normal. This appropriation of interest has caused many prospective buyers to rethink their decisions and carefully weigh the market situation. The general mood among those surveyed is characterized by strong uncertainty, which continues in view of economic developments.

Overall, the Bank of America survey clearly shows how current economic conditions are influencing the behavior of homebuyers. Uncertainty remains high as many forces in the real estate market continue to operate in volatile territory. A wait-and-see approach appears to be the preferred route for many prospective buyers for now.

Further information can be found in the report from Tradingview and MarketScreener available.