The "ghost story" of American real estate continues: 30-year mortgage rates exceed 7%

Last week, mortgage rates in the United States surpassed 7%, reaching the highest level since early May last year, continuing the recent upward trend and putting more pressure on potential homebuyers... On Wednesday, data released by the Mortgage Bankers Association showed that for the week ending January 10, the average rate on a 30-year fixed mortgage in the U.S. rose by 10 basis points to 7.09%, marking the fifth consecutive week of increases, which has raised housing financing costs by nearly 1 percentage point since the end of September last year. This is in contrast to the Federal Reserve's rate-cutting path, as the Fed has cut rates by exactly 100 basis points since September last year, indicating that the "ghost stories" of the U.S. real estate market continue to unfold. According to an analysis from a previous article by Wall Street View, the "countercurrent" of mortgage rates is due to the fact that the Fed's rate cuts mainly affect short-term rates like the federal funds rate. Meanwhile, most mortgage rates are more closely correlated with long-term bond yields. With Trump set to take office, his economic agenda, including extending the tax cuts from 2017, is expected to add trillions of dollars to government debt. The U.S. budget deficit last year exceeded $1.8 trillion, reaching a historical high outside of the COVID-19 pandemic period. Concerns about persistent inflation and rising budget deficits are intensifying, driving U.S. Treasury yields to soar, and mortgage rates are following the upward trend of Treasury yields. On Tuesday, the yield on the 10-year U.S. Treasury bond briefly rose to its highest level since October 2023, currently reported at 4.763%. High housing financing costs and persistently high asking prices are continuously pressuring buyers' affordability, causing potential buyers to hesitate. Compared to the same period last year, unadjusted mortgage applications fell by 1.8%. However, the Federal Reserve has indicated that it will slow the pace of rate cuts this year due to concerns that achieving the 2% inflation target may be hindered, and there remains uncertainty about the impact of Trump's economic policies on the economy. Later today, the U.S. will release the latest CPI inflation data, with economists expecting the December Consumer Price Index to rise by 2.9% year-on-year, up from 2.7% in November