Overview
- The U.S. 30-year fixed mortgage is a global outlier; markets like Canada, the UK, and Australia rely on shorter terms rolling into adjustable rates.
- International systems force price adjustments as payments shift, whereas the U.S. model allows sellers to wait out downturns, impacting sales volume instead.
- Unlike foreign markets where fluctuating rates motivate turnover, the U.S. structure creates "lock-in" effects that stagnate market movement.
The U.S. housing market is moving through a period shaped by the quiet pressure of mortgage rates. Most households hold mortgages with interest rates under 4%. Taking on a new mortgage with current rates would mean a double-digit jump in monthly payments. The security of a low rate provides comfort, and it also fixes people in place.
This forced stability is shaping and stagnated futures.
“The 30-year fixed mortgage makes the U.S. housing market unique. It brings stability but it heavily anchors homeowners in place.” said Cotality Principal Economist Thom Malone “Instead of prices adjusting when demand drops, sellers hunker down and try to wait out the downturn. This makes the U.S. housing cycle about volume, not prices”.
The 30-year fixed mortgage is unique to the U.S. and offers borrowers long-term stability and predictable payments.
In Canada, the UK, New Zealand, and Australia, markets follow a different pattern. Shorter fixed terms roll into adjustable rates. This creates an ongoing negotiation between household incomes and shifting mortgage payments that can motivate moves.
The U.S. system moves differently. Sellers have the flexibility to operate at a slower pace, and that pace can create chokepoints that slow down the entire market.
The burden on households has grown. Per-person income in the U.S. increased by about 25% in nominal terms over the last five years. Home prices grew far faster, rising 55% in the same period. Once inflation and rate changes took hold, ownership costs moved ahead of earnings. Mortgage rates climbed from 3% to more than 6%, and many U.S. counties recorded meaningful jumps in property taxes. Insurance premiums added another layer of expense, especially in wildfire and hurricane corridors.
Locked-in living
Cotality experts say this pattern echoes of the imbalance that preceded the Great Recession. The tipping point will be felt in small increments — a renewal notice, a tax adjustment, a lender quote. But for now, households and terms are staying put.
Most households are responding to current dynamics by putting off moves, opting instead to preserve the safety net of a mortgage rate below 4% and a large equity cushion.
Sales volumes have slumped to just 75% of their 2020 levels. Inventory remains thin. Owners feel limited by fixed rates they cannot replace. Transactions and people can only move when a seller values motion over preserving price.
Life events will continue to set the pace of demand. A family changes its shape through marriage or divorce. A new role creates a commute that no longer works. A retirement plan steers someone toward a new state. These turning points do not wait for lower rates or market clarity. Eventually, enough momentum will build for the market to follow.
Global signals
Other countries show what happens when mortgages reset quickly. In Canada, the UK, New Zealand, and Australia, lenders rely on adjustable or short-term fixed mortgages that reprice frequently. Rising rates flow straight into household budgets and monthly payments increase.
Jumps in international home prices
*Prices are relative to Jan 2020
Data sources: Cotality HPI, 2025; Cotality NZ HVI, 2025; Cotality Australia HVI, 2025, Teranet-National Bank HPI, 2025, and UK Office for National Statistics HPI
These adjustments moved directly into pricing. The UK, Canada, and New Zealand recorded peak-to-current price declines of 10%, 14%, and 28%. Australia saw strong nominal growth during the same period, yet inflation absorbed much of that gain. Real Australian prices sit about 4% below their peak.
Cotality analysis shows that real equity growth across these markets has also been limited. Since January 2020, real prices rose 17% in Australia, 11% in Canada, and 0% in New Zealand. In the UK, they fell by 4%. These figures sit well below the headline price tags and explain why sales activity has started to pick up as households recalibrate their expectations.
Global home price growth
Data sources: Cotality HPI, 2025; Cotality NZ HVI, 2025; Cotality Australia HVI, 2025, Teranet-National Bank HPI, 2025, and UK Office for National Statistics HPI
“I’ve never seen this kind of separation between prices and incomes,” said Cotality Australia’s Head of Research Eliza Owen. “I think that lack of affordability is going to butt up against stalled-out interest rates. It might not be enough to take the mighty Aussie market down, but it will take heat out of the growth rate and possibly sales volumes.”
The U.S. remains the exception. Homeowners held $17 trillion in equity in the third quarter of 2025. This cushion gives many households the ability to wait, and that patience slows the entire system.
Normalized global home sales numbers
*Sales are relative to Jan 2020
Data sources: Cotality HPI, 2025; Cotality NZ HVI, 2025; Cotality Australia HVI, 2025, Teranet-National Bank HPI, 2025, and UK Office for National Statistics HPI
Systemic cracks emerge
Widespread reluctance to let go of low interest rates continues to restrict U.S. sales. The Federal Housing Finance Agency estimates that 1.7 million home sales did not happen between 2022 and 2024 because homeowners stayed with historically low rates. With the national median home price sitting near $400,000, the barriers to homeownership continue to accumulate.
Then there’s the pressure of ongoing homeownership. Escrow costs are rising. Property taxes have climbed by roughly $700 annually since 2020, and insurance now adds about $1,000 to yearly household costs in several high-risk states. These increases create strain for some and motivate movement for others.
The strength of accumulated equity shields most households from hardship sales, yet system-wide stress has reached Washington. Policymakers are considering extended loan terms — up to 50 years — and portable mortgages that allow people to relocate without relinquishing their existing rate. The numbers show that a 50-year mortgage on a $320,000 loan with a 6% interest rate would reduce the monthly payment by roughly $225 and add about $335,000 in total interest over the life of the loan. These structures aim to create mobility, and they also introduce new risks.
Rethinking the mortgage map
The variable-rate environments in other countries create movement, yet they also draw down household wealth as payments rise. The U.S. approach delivers steadier equity gains, but these gains now hold people in place. Households protected by long-term mortgage structures have maintained stability through shifting cost environments, but this has created a slower path toward market renewal.
Cotality analysis points to a prolonged period of restricted movement through 2027. The timeline reflects the strength of equity positions and the natural pace at which life events build momentum. Increases in listings will be an early indicator of how quickly mobility returns. Regional tax trends, insurance loads, and price adjustments will shape the next phase for the U.S. property market.
As more families reach moments that require a change in place or space, the market will begin to loosen. The rhythm of that loosening will influence planning across lending, insurance, construction, and local governments.
Cotality will continue to map these shifts as they appear — in financial signals, behavioral patterns, and lived experience.
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