2025 Mid-Year Mortgage Update


NMLS# 402933
UBLocal.com

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As we pass the midpoint of 2025, the Vermont housing market continues to navigate a complex and rapidly evolving landscape. While affordability and housing availability remain front and center, new challenges—and a few encouraging opportunities—are shaping this year’s outlook.

Despite rising interest rates, Vermont homeowners continue to lead the nation in home equity strength. Nationally, equity withdrawals surged 22% year over year, reaching nearly $25 billion in Q1—the largest such figure in 17 years. These withdrawals highlight the significant wealth Vermonters have tied up in their homes.

Mortgage interest rates are expected to decline modestly in the second half of 2025, likely averaging in the mid-to-upper 6% range for a 30-year fixed mortgage. This depends on potential Federal Reserve rate cuts, with September as a likely starting point. However, rates remain sensitive to inflation and economic data.

Housing Affordability

Vermont is addressing affordability with a range of mortgage programs. Local lenders like Union Bank consistently rank as top VHFA partners, and innovative tools like the LendTogether shared equity program aim to further improve access.

According to the U.S. Census Bureau, 820 permits were issued as of May 2025, down from 1,036 in May 2024. Despite fewer permits, Union Bank continues to report healthy construction lending.

As of mid-June, Freddie Mac reports the average 30-year mortgage rate at 6.81%, slightly lower than this time last year. Though affordability remains strained, 809 new housing units were authorized through April, signaling modest growth in construction activity.

Beware of the Rise of Title Pirates

Scammers are targeting unoccupied land and mortgage-free properties, fraudulently listing them for sale. Warning signs include:

  • Communication only by email
  • Refusal to meet in person
  • Cash-only demands
  • No in-person notary

Awareness is critical to stopping these fraudulent practices.

Looking Ahead

While obstacles remain, demand for mortgage and construction financing remains strong. Union Bank continues to offer local insight, trusted guidance, and tailored solutions to help communities thrive—regardless of market conditions.

Footnotes:

  1. Union Bank
  2. MPA Record home equity, falling rates drive borrowers back to HELOCs
  3. Freddie Mac Mortgage Updates
  4. U.S. Census Bureau New Construction Update