Why are mortgage rates so high? The United States mortgage rates are skyrocketing! In the past six months, the average for a 30-year fixed loan has gone up to 2.97%, up from 2.81% last week and the highest since August 2020. The Freddie Mac report, which was released on Thursday, showed that the US’s mortgage rates have climbed from the record low of 2.65%, reached in early January.
These high rates are terrible for people in the mortgage business, which had been experiencing a record boom like never before. The mortgage industry posted record profits in 2020.
Low mortgage rates experienced during the pandemic had created a false pandemic housing boom, but now, Covid vaccines are massively coming out, and with a rising optimism about imminent economic recovery, the prices are shooting back up. However, investors are increasingly optimistic that if life gets back to normal, jobs will return to the economy, then more people can have access to loan facilities.
The soaring Home prices are even worse in the suburbs, where buyers have to fight over the increasingly scarce availability of homes.
Furthermore, with the high mortgage rates, mortgage applications drastically dropped to a nine-month low last week, and then, the pending home sales fell to a six-month low in January.