Bank of America Sees US Mortgage Market Staying Weak in 2027
New York, US | October 20, 2026: The US mortgage market could face another difficult year in 2027, with elevated interest rates expected to keep home sales and refinancing activity subdued. Bank of America is projecting total US mortgage originations of about $1.72 trillion next year, pointing to a housing market that could look more like the rate-pressured conditions seen in 2023 than a broad recovery.
The forecast comes as borrowing costs remain high and homeowners continue to hold onto older mortgages with much lower interest rates. That “lock-in” effect is limiting the number of homes coming onto the market while also reducing opportunities for refinancing.
Mortgage Originations Could Fall to $1.72 Trillion
Bank of America expects total mortgage originations to reach approximately $1.719 trillion in 2027.
The forecast is lower than several other industry projections, reflecting expectations for weaker home sales, limited refinancing activity and mortgage rates remaining elevated.
For the housing industry, a smaller origination market means lenders could continue competing aggressively for a limited pool of borrowers.
Refinancing Demand Is Expected to Remain Weak
Refinancing is likely to remain one of the biggest challenges for the mortgage industry.
Bank of America projects only about $344 billion in refinance originations in 2027. Millions of homeowners who secured significantly cheaper mortgages during the low-rate years have little financial incentive to refinance while current rates remain substantially higher.
This could keep existing homeowners in their current properties for longer and restrict housing turnover.
The Mortgage Lock-In Effect Is Still Holding Back Supply
High mortgage rates are influencing both sides of the housing market.
Homeowners with older, lower-rate loans may hesitate to sell because purchasing another property would mean replacing their existing mortgage with a much more expensive one.
That dynamic can reduce the supply of homes available for sale, even when potential buyers remain interested.
For developers and investors, the resulting shortage of resale inventory could continue supporting demand for newly built homes in markets where population growth remains strong.
Home Sales Could Remain Under Pressure
The mortgage forecast also points to subdued housing activity in 2027.
Even if home prices stop rising rapidly, elevated financing costs can keep monthly payments high. This makes affordability a larger consideration for buyers and can delay purchase decisions.
The result could be a market where transaction volumes remain relatively weak even without a major nationwide decline in property values.
What It Means for Homebuyers
For buyers, the outlook suggests that waiting for mortgage rates to fall sharply may not necessarily produce an immediate affordability breakthrough.
A lower rate can improve monthly payments, but home prices, inventory and household income will remain equally important.
Buyers should therefore compare the complete cost of ownership rather than focusing only on the headline mortgage rate.
What It Means for Property Investors and Developers
For investors, a slower mortgage market could create different opportunities across regions.
Markets with strong employment, population growth and relatively affordable housing may continue attracting buyers despite high financing costs. Developers in such locations could benefit from limited resale inventory and sustained demand for new homes.
At the same time, projects dependent on rapid sales turnover may face greater pressure if borrowing costs remain elevated for longer.
What Happens Next
The biggest question for the US housing market is whether mortgage rates can move meaningfully lower during 2027.
If rates remain high, the lock-in effect is likely to continue restricting existing-home supply while keeping refinancing activity weak. If borrowing costs decline, pent-up demand from homeowners and buyers could return to the market.
For Grihik readers, the key takeaway is that 2027 may not bring a broad US housing recovery overnight. Instead, the market could increasingly reward locations where affordability, employment and housing supply remain in balance.