Mortgage interest rates in the United States have been rising in recent weeks. At the beginning of February there was a slight drop of 5.9%, but in the last few days the increase reached 6.8%. The self-assessed index rose to 7.3% in the final phase of 2022. This current increase is due to several elements. First, the rise in financial markets, which continue to be completely cornered by inflation. The Federal Reserve, in turn, constantly carries out measures for its control, but still does not achieve this effectively and quickly.
The affordability of the real estate market is falling due to the rise in mortgage rates, for obvious reasons. However, in recent months and years, this area has been characterized by alarming instability in its registries and key indices.
In fact, such a high number has not been seen in this regard since last November. I’ll give you an example to give you an idea of what this a priori “slight increase” in mortgage rates means.
On a $500,000.00 mortgage at a 6.8% interest rate, the borrower receives a monthly payment of $3,260.00. Compared to the 5.9% interest rate, the payment would be $2,995.00 including interest.
Access to housing is becoming more difficult every day
It is necessary to evaluate the phenomenon of this recent increase as a whole, considering that it is not a figure that is that far from historical averages. Here we need to analyze, among other things, the price of the house, the income of borrowers, monthly payments.
The bottom line is that access to housing in the United States is becoming more complex by the day. A similar situation existed back in 2007. Several experts agree that the recovery in home sales will be difficult and slow as long as mortgage rates remain high.
