The United States is experiencing an alarming increase in mortgage interest rates, causing concern among potential homebuyers. This week, the average interest rate on a 30-year fixed-rate home loan has risen to 7.09%, the highest since 2002. And after 20 years, US Mortgage Interest rates reached their highest levels.
The US mortgage interest rates are primarily due to the Federal Reserve’s efforts to control inflation by raising interest rates. Unfortunately, this increase has more than doubled mortgage interest rates in the past two years, making it difficult for many people to afford homeownership.
This issue is particularly challenging for first-time buyers who need more substantial down payments and rely on financial support from family members.
US Mortgage Interest Rates
The higher mortgage rates also affect existing homeowners who wish to relocate or upgrade. They are discouraged from selling their homes as it would mean taking on a more expensive mortgage. It is causing a shortage of resale homes and a slow pace of home sales.
The National Association of Realtors‘ chief economist, Lawrence Yun, has emphasised the impact of these rising rates on the housing market, stating a significant drop in home sales compared to the previous year due to a shortage of homes available for sale.
The surge in mortgage rates is linked to the 10-year Treasury yield, which has also experienced an upward trend. Experts attribute this rise to expectations that the Federal Reserve will continue to maintain higher interest rates to control inflation. As the 10-year yield increases to 4.3%, the gravity of the situation is further underscored.
The US Mortgage Interest Rates are causing significant challenges for potential buyers and homeowners alike. Experts predict that this trend will have long-lasting effects on the housing market and the affordability of homeownership in the US.