Mortgage Minute
As of February 25, 2025, the U.S. housing market continues to navigate a landscape marked by elevated mortgage rates and persistent affordability challenges. The national average 30-year fixed mortgage rate stands at approximately 6.85%, reflecting a slight decrease from previous months but remaining significantly higher than rates observed in the early 2020s.
In South Carolina, mortgage rates closely align with national averages. As of February 24, 2025, the average 30-year fixed mortgage Annual Percentage Rate (APR) in the state is 6.662%, with 15-year fixed mortgage APRs averaging 5.913%.
Focusing on Hilton Head Island, SC, current mortgage rates are slightly above state and national averages. Borrowers can expect rates around 6.854% for a 30-year fixed mortgage, 6.027% for a 15-year fixed mortgage, and 7.202% for a 5-year adjustable-rate mortgage (ARM).
The elevated mortgage rates have contributed to a cooling effect on the housing market. In January 2025, existing home sales nationwide experienced a 4.9% decline compared to December 2024, reaching a seasonally adjusted annual rate of 4.08 million units. Despite a 2% annual increase, these figures fell short of economists' expectations. The national median sales price of homes increased by 4.8% year-over-year to $396,900.
In Hilton Head Island, the housing market reflects similar trends. The average home value is $763,739, marking a 1.8% increase over the past year.
The combination of high home prices and elevated mortgage rates has deterred many potential buyers, particularly first-time buyers, who accounted for only 28% of purchases in January.
Looking ahead, forecasts suggest that mortgage rates will remain relatively stable throughout 2025. Fannie Mae estimates that 30-year mortgage rates will average around 6.8% for the year.
Similarly, the Mortgage Bankers Association predicts that rates will gradually decrease from 7% at the beginning of 2025 to approximately 6.4% by the end of 2026.
In summary, while mortgage rates have slightly decreased from their peak levels, they remain elevated compared to historical standards. This environment presents challenges for both buyers and sellers, particularly in markets like Hilton Head Island, where home prices are relatively high. Prospective buyers should carefully assess their financial situations and consider the potential for future rate adjustments when making purchasing decisions.
