PHOTO: The demands of the Covid-19 pandemic and low borrowing rates heated up the US housing market even as the broader economy suffered
Mortgage rates are finally ticking up in the United States, one year after the Federal Reserve cut its lending rate to boost the economy as the Covid-19 pandemic arrived, but that’s not expected to cool the hot housing market.
While the wider US economy has struggled after states restricted business to stop Covid-19, real estate was one of the few bright spots in 2020, boosted both by low mortgage rates and the shift towards remote work caused by the pandemic.
“We’ve seen mortgage rates move higher in the past month or so,” Joel Kan of the Mortgage Bankers Association told AFP.
The housing market is a key part of the world’s largest economy, and mortgage rates are closely watched to gauge the ease with which Americans can buy property.
They are tied into the wider US Treasury bond market, where yields have been rising in recent weeks as traders fear that the economy’s improving health could bring inflation with it.
Rates on 30-year mortgages are now ticking up and expected to hit 3.5 percent by the end of the year, after dropping in July below three percent, a low not reached before.
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