The average interest rate on a fixed 30-year mortgage has hit 5.78% in the US, jumping 0.55% on the week before — which is the sharpest one-week rise since 1987.
Cooling off
The sharp upward movement, which has seen rates almost double in just 6-7 months, is a big deal when you account for the fact that house prices themselves are still near record highs. High prices, and now high(er) rates = a record drop in housing affordability.
More expensive mortgages are likely to curb demand for houses, which in theory should take some of the heat out of the red-hot housing market. That said, rates in the US are still not particularly high relative to much of recent history. In 2000 they were up over 8%. In the late 80s they were 10-12%.
