U.S. mortgage rates rose to 5 percent for the first time in over a decade, raising the pressure on the housing market and adding another burden to home buyers who were already struggling with rising prices, the New York Times reported. Since the beginning of the year, interest rates on a 30-year fixed-rate mortgage have climbed from about 3 percent to 5 percent, the fastest jump since the 1980s, according to Freddie Mac. The rise has added hundreds of dollars a month to the typical house payment and comes on top of two years of blistering price increases in excess of 30 percent. Such a sudden jump in borrowing costs, in a market where buyers across the nation are already struggling to afford a home, would normally spell doom for home sales and housing prices. But in the unusual pandemic-recovery economy of rising wages, supply chain disruptions and enormous changes in how Americans live and work, it’s unclear how significant a difference higher rates will make. Economists generally believe rising rates will cool the market a little, at least compared with the past two years of double-digit price gains. Indeed, there are some early indications that expensive markets on the East and West Coast are already seeing a slight decline in buyer interest. The problem, in the housing market and the broader economy, is that there isn’t much to buy. The inventory of homes for sale remains extremely tight, with far more buyers than sellers. This means that even though rising rates will push many would-be homeowners out of the market or into a lower price range, there remains more demand than homes on the market.
