The national debt is rising, foreign holders of US Treasuries are now selling, and the 10-year Treasury yield is expanding.
Business Insider says that the 30-year fixed mortgage rate has jumped significantly as well. Various reports indicated that the average 30-year fixed rate mortgage with conforming loan balances jumped to 4.02 percent this week, a 0.40 percentage point increase in just three trading days. Mortgage applications and refinance activity dropped, too.
A rate of 4 percent is still low, but rising home prices will make it tough to buy.
If rates rise one percentage point, for example, from 3.5% to 4.5%, the monthly payment for many cash-strapped households moves out of reach. With a $220,000 mortgage, the monthly payment jumps by $127 from $988 to $1,115. This makes life $1,524 per year more expensive. Households that have trouble making ends meet suddenly can’t get there.