Home loan interest rates have skyrocketed in the USA. Buying a house has become a dream

Mortgage interest rates in the USA have reached their highest level in the last three years. This increase, which occurs four weeks before the congressional elections, aggravates the cost burden of those who want to own a home.

The Mortgage Bankers Association (MBA) announced that the average interest rate on a 30-year fixed mortgage loan increased by 19 basis points to 7.49 percent in the week ending October 2.

Credit costs were last recorded above this level in November 2023.

TREASURY BONDS RETURNS PUT INTEREST RATES UP

Mortgage interest rates in the US closely track 10-year Treasury bond yields.

Bond yields reached the peak of the last 24 years at the beginning of the week, due to inflation concerns triggered by climbing oil prices and economic growth data that exceeded expectations.

Mortgage interest rates have risen about 1.4 percentage points since the start of joint U.S. and Israeli attacks on Iran in late February.

During this period, 10-year bond yields followed a similar trend, rising above 5.3 percent on Monday.

According to the indicator targeted by the US Federal Reserve (Fed) at 2 percent, inflation was measured as 3.4 percent in August.

Fed officials point out that another interest rate increase is planned until the end of the year, following the interest rate increase in September.

The expectation that the Fed will not change interest rates at the meeting at the end of October is dominant in the markets.

DEMAND TO BUY A HOUSE IS DECREASING, APPLICATIONS ARE DECREASING

The rise in loan interest rates also limits the mobility in the market.

According to MBA data, housing loan applications decreased by 4.2 percent last week compared to the previous week. There was a sharp decrease in loan restructuring applications.

MBA Deputy Chief Economist Joel Kan said in a statement to the Reuters agency, "The number of homeowners who want to restructure their loans with these interest rates has decreased significantly. This jump in borrowing costs has caused potential buyers to withdraw from the housing market."

COST OF LIVING IS ON THE AGENDA OF THE FUND

The pressure on the housing market comes ahead of the November 3 elections that will determine whether Republicans, led by President Donald Trump, can maintain their majority in Congress.

The public opinion poll, completed on Monday in partnership with Reuters/Ipsos, revealed that American voters mostly consider the cost of living when going to the polls.

The high cost of living is among the main reasons for the decline in Trump's approval rate, whose public support fell to its lowest level at 32 percent.