Mortgage rates in the United States have reached a 21-year peak, rising above 7.5% for the first time since November 2000, according to data from the Mortgage Bankers Association. The significant increase can largely be attributed to aggressive rate hikes by the Federal Reserve.
A survey by the Mortgage Bankers Association found that U.S. mortgage rates peaked at 7.53% on Wednesday. This rise in interest rates has led to rising costs for households, with a €400,000 30-year mortgage now requiring almost €1,000 more monthly than last year.
Rising interest rates have also resulted in a decline in home purchase applications, which have fallen to the lowest level since 1995. This decline is due to exorbitant interest and property prices, leading to a gridlock in the real estate sector.
Data from Zillow (NASDAQ:) indicates an increase in sellers lowering asking prices, further highlighting the pressure on the housing market. In addition, Mortgage News Daily predicts further increases in mortgage rates, a forecast supported by rising 10-year U.S. Treasury yields – the highest since 2007 – fueled by unexpected vacancies that signal a tight labor market and persistent inflation.
These economic indicators suggest that most U.S. officials expect high interest rates to persist beyond the Federal Reserve’s final two meetings in 2023.
JP Morgan CEO Jamie Dimon has issued a cautionary statement regarding future interest rates. Despite these challenges, a strong labor market ensures that consumer spending remains stable.
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