Rising Mortgage Rates Are Starting to Become a Problem
It’s not just that refinancing is down, but Americans still looking to buy will feel the full brunt of skyrocketing home prices.
Th cost is going up.
Photographer: Saul Loeb/AFP/Getty Images
One of the pillars of the U.S. economic recovery during the Covid-19 pandemic is starting to crack.
The red-hot U.S. housing market, fueled by record-low interest rates, is one of the the most important stories of the past year when it comes to understanding the sharp rebound in financial markets and the relatively pristine condition of many household balance sheets. The Freddie Mac 30-year fixed mortgage rate started 2020 at 3.72%, just 40 basis points above its all-time low, and plunged to 2.65% by the start of this year. That drop in borrowing costs led to all sorts of astounding figures: The largest quarterly volume of mortgage originations in history; the most refinancing in a year since 2003; the most debt taken on by first-time buyers on record; and a collective $182 billion of home equity withdrawn during 2020, or an average of about $27,000 for each household.