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Home Loan Rates Hit 7% for the First Time in Months

USAFriday, January 17, 2025

Lately, inflation has been tough to handle. Last month, prices went up by 2. 9% compared to the same time last year, according to the Labor Department. This shows that the Federal Reserve is still fighting against quick price increases. Last year, the Fed started lowering interest rates to levels not seen since the 2008 financial crisis. They cut rates three times. Now, they plan to cut rates only twice this year, and some experts think they might not cut rates at all in 2025. Mortgage rates have been going up, even though the Fed has been lowering its target rate. This is because long-term rates, like those for mortgages and car loans, are set by investors and reflect their expectations for the future economy. Even though the rate on the 10-year Treasury bond has dropped a bit recently on some good news about inflation, it's still much higher than it was a few months ago. Mortgage rates are now more than double what they were at the start of the coronavirus pandemic, when they were around 3%. This rise has made many homeowners hesitant to sell, as they don't want to give up their lower rates. But Lu Liu, an assistant professor of finance at the Wharton School, thinks homeowners might get used to the current rates in the next year or two.

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