US Primary Mortgage Loans Reach Record High Since COVID-19... Could This Signal a Decline in Housing Prices?

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Ahead of the U.S. Federal Reserve's interest rate hike, mortgage rates have reached their highest levels since the COVID-19 pandemic.

On the 13th (local time), the Wall Street Journal (WSJ), citing the U.S. government-sponsored mortgage company Freddie Mac, reported that the 30-year fixed-rate mortgage rose to 3.45%, up 0.23 percentage points from a week earlier.

This marks the third consecutive week of increases and is the highest rate since 3.5% in March 2020.

A year ago, the 30-year fixed-rate mortgage was at 2.79%, slightly above the all-time low of 2.65%.

The 15-year fixed-rate mortgage rose 0.19 percentage points to 2.62% compared to a week earlier. The 5-year adjustable-rate mortgage also increased from 2.14% to 2.57% within a week.

WSJ analyzed, "The Federal Reserve's anticipated rate hikes are pushing mortgage rates higher," adding, "Due to high borrowing costs and record-high home prices, housing demand may decline in the future."

According to the National Association of Realtors (NAR), the median price of existing homes in the U.S. was $353,900 (approximately 420 million KRW) in November last year, up 13.9% from a year earlier.

Sam Carter, Chief Economist at Freddie Mac, forecasted, "Considering the rising home prices, the upcoming rate hikes are likely to dampen housing demand soon."

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