Amidst the surge in US mortgage rates to a 22-year high, real estate agents have introduced a 1% down payment plan.

With US mortgage rates reaching a 22-year high, surpassing 7%, the US real estate market is facing the risk of rapid freezing. On Thursday, August 24th, US real estate agency Zillow began offering mortgage loans with a down payment of only 1%, in an attempt to attract homebuyers facing the most unaffordable market in nearly forty years. According to a statement from the company, Zillow's 1% down payment plan is even lower than the 3% down payment plan offered by Fannie Mae. Zillow will assist homebuyers in paying an additional 2% down payment at the time of transfer. On Thursday, US mortgage loan rates reached a 22-year high, further increasing the pressure on potential homebuyers. Fannie Mae stated in a statement on Thursday that the average interest rate for a 30-year fixed-rate loan is 7.23%, the highest level since May 2001, higher than last week's 7.09%. Some analysts believe that Zillow's introduction of the 1% down payment plan is aimed at expanding its customer base and may "establish a fair competitive environment with larger competitors." However, this may harm the company's profit margin, and in the long run, paying a 2% down payment at the time of transfer may be costly. Zillow first piloted this new plan in Arizona before expanding it to other locations. After suffering heavy losses, the company discontinued its similar real estate transaction business in 2021. Now, US homebuyers are facing the most unaffordable market in nearly forty years. Since the beginning of last year, mortgage loan rates have doubled, causing existing homeowners to be unable to move and list their properties for sale. Sam Khater, Chief Economist at Fannie Mae, said that due to determined buyers having to compete for "pitifully low" housing supply, home prices are rising. The National Association of Realtors reported that inventory shortages led to the slowest pace of existing home purchases last month since the beginning of this year. Data released by the US government on Wednesday showed that due to a shortage of housing inventory in the resale market, new home purchase contracts reached the highest level in over a year. Some of the largest builders are able to offer better mortgage loan rates than banks.