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U.S. mortgage rates continue to rise

After cutting interest rates by 50 basis points for the first time in September, the Fed cut interest rates again by 25 basis points in November. However, the latest data from the US residential loan mortgage company Freddie Mac shows that since the Federal Reserve first cut interest rates, the average interest rate for 30-year fixed mortgages has risen instead of falling. The data rose to 6.79% on November 7, the sixth consecutive time. Weekly rise. According to the annual market conditions report released by the National Association of Realtors (NAR) on November 4, the average age of U.S. home buyers has jumped to 56 years old, a record high; it was 49 years old last year, but it was also much higher than more than 10 years ago. The average age is around 40 years old.

From this point of view, the Federal Reserve's continued interest rate cuts have little effect on lowering mortgage interest rates. The reasoning behind this is that even though the Fed wants to lower the cost of borrowing money to buy homes, cars and other goods, mortgage rates are not set by the Fed and are heavily influenced by U.S. Treasury yields. But U.S. Treasury yields can move up or down based on economic expectations. In recent times, U.S. bond yields have been rising across the board, driven by multiple factors. In addition, U.S. Republican presidential candidate Trump defeated Democratic candidate Harris and was re-elected as the U.S. president in a historic manner, which also gave rise to U.S. bond yields because investors believed that Trump’s tax cut agenda and promises Raising tariffs will increase deficits, boost economic growth and exacerbate inflation. Market participants said that for people in the United States who plan to buy real estate, even if the Federal Reserve cuts interest rates, the Fed's high interest rates will last longer in the future, and only if the U.S. economy shows some real signs of weakness will interest rates drop significantly. possible.

In addition to rising mortgage rates, U.S. consumer borrowing rates have not fallen rapidly following the Federal Reserve's sharp interest rate cuts. According to data from U.S. information services company Bankrate, the average U.S. credit card interest rate dropped only slightly from 21% on September 18 to about 20% on November 6. The average five-year loan rate on a new car is currently 7.6%, down only slightly from 7.7% in mid-September. But even so, the Fed's monetary policy is still viewed as guidance by many consumers. Data from U.S. car-buying websites show that nearly two-thirds of car buyers said in a survey in August that the Fed's interest rate cut would affect the timing of car purchases. In addition, after the Federal Reserve cut interest rates sharply, the interest rates banks pay to customers on deposits are also slowly declining. Bankreit data shows that the highest average interest rate on one-year certificates of deposit was 4.6% at the end of October, lower than 4.9% in mid-September; the highest interest rate on savings accounts also fell from 5.3% to 5.1% during the same period.

Rising mortgage rates in the United States have put pressure on the real estate market. Data released by the National Association of Realtors showed that U.S. second-hand home sales fell to a 10-month low in August and fell further in September. According to data from the Mortgage Bankers Association, U.S. mortgage applications have fallen for six consecutive weeks. Some Americans said that in the past few years, housing prices in some areas have almost doubled. Although they have the need to replace their homes, they are worried that the current high mortgage interest rates may not be conducive to finding a buyer. At present, the rise in U.S. mortgage loans has not only suppressed the demand for first-time home buyers, but also curbed the refinancing needs of homeowners for second home upgrades. The National Association of Realtors said that in the year ending July 2024, the median age of first-time homebuyers rose from 35 to 38, while the share of first-time homebuyers fell from 32% to 24%. That's the lowest rate since the association started tracking the data.


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