Across the United States, the long-term average mortgage rates continued to accelerate over the week, with 30-year mortgages reaching their highest point since 2009.
The acceleration in mortgage rates emerges after the Federal Reserve declared that it intends to continue its fight against the worst inflation in four decades by increasing its benchmark interest rate by half a percentage point.
Furthermore, the Federal Reserve emphasized that it was likely to hike rates even further over the months to come. Taking its most aggressive move since 2000, the Federal Reserve’s decision will lead to higher costs for mortgages, alongside auto loans and credit cards.
Borrowing costs for business and consumers will also be significantly higher.
Freddie Mac, a mortgage buyer, recently reported that the 30-year interest rate has increased from 5.1 percent to 5.27 percent over the course of just a week. At the same time last year, the average mortgage rate was 2.96 percent.
Furthermore, interest rates for 15-year mortgages have also amplified, notably from 4.4 percent to 4.52 percent over the course of a week.
Inflation has soared to all time highs under the Biden administration, resulting in remarkably high prices that discourage home ownership for many individuals, especially those who are buying a home for the first time.
Personal home sales may decrease by as much as 10 percent in 2022, relative to home sales in 2021.
The Federal Reserve also added that the ongoing war in Ukraine will enhance inflationary pressures, chiefly through high food and oil prices. The extended duration of the conflict will likely enhance these pressures.
According to the preferred gauge of the Federal Reserve, inflation skyrocketed to 6.6 percent in the past month, representing the highest level in forty years.
Inflation has been fueled by a number of factors, including high degrees of post-pandemic consumer spending coupled with massive supply chain issues. Furthermore, accelerated gas and food prices further amplify inflationary pressures.