Mortgage credit rates in the United States will fall in a period of one to two years; hit 20-year highs

Inflation has made central banks around the world take a more aggressive stance to contain the problem; however, at the same time, the cost of financing, such as the mortgage, also rises, which affects the home buyers.

In the United States, Federal Reserve increased for the fourth time in a row rate to place it in a range of 3.75 to 4%, which has not been observed since December 2007. In this context, analysts indicated that it is likely that the rate of mortgage credit, which is currently reaching maximum levels not seen in 20 years, will fall in at least one or two years.

“Las mortgage rates are close to 20-year highs, and that hurts home buyers. Once inflation is contained, mortgage rates will start to decline, but it may be a year or two before that happens,” said Lorenzo Yun, chief economist at the National Association of Realtors in the United States (NAR).

In its most recent report from the last week of October of this year, the firm Freddie Mac reported that the average rate of a 30-year mortgage loan was 7.08%, a level not seen since 2002.

For Yun, the mortgage market has discounted the FED’s aggressive moves, so the cups long-term interest rates seem to move slowly. “Interest rates in the long term they seem to move only slightly. The mortgage market has already discounted the latest FED move”.

Greater impact

For Nadia Evangelou, Senior Economist and Director of Forecasting at NAR, the increase in interest rates has increased the monthly payment by $1,000, so the minority groups in that country they become the most affected by this scenario.

According to Evangelou, during the minimum levels of mortgage loan rateswhich occurred between 2019 and 2021, not all people in USA they were able to take advantage of it, since, for example, the rate of ownership of white citizens increased almost three percentage points, while in the black people the growth was two percentage points.

“Con 7% mortgage ratesonly 15% of black households currently can afford to buy a typical home, compared to 30% of white households,” Evangelou explained.

In this context, the specialist noted that families made up of black people may be left behind in the home ownershipcompared to white people, in the current scenario.