Mortgage Interest Rates at a Glance: Inflation Fears Rise

Median mortgage rates have risen again significantly recently. According to Moneypark, inflation fears in the United States fueled a rapid rise in capital market rates around the world. Even medium and long-term mortgage rates could not have escaped this pull.

The benchmark rates – that is, the average mortgage rates of 150 banks, insurance companies and pension funds – increased in the medium and long term, according to Wednesday’s announcement. For ten-year fixed-rate mortgages, it was 13 basis points. With a target rate of 1.30 percent, they returned to the March 2020 level shortly after the outbreak of the Corona crisis. There was a less pronounced increase in five-year maturities, that is, from 6 basis points to 1.00 percent. Two-year mortgages were unchanged at 0.90 percent.

Currently, long-term interest rates are expected to stabilize at the current level and not increase in the long term. Fears of inflation in the United States and the consequent rise in interest rates around the world were violent and unexpected. Many economists were surprised by the “hysterical reaction” of some market participants and it is more likely to be a flash in the pan than a fundamental change of course.

Consequently, mortgage interest rates are likely to stabilize at the current level. In addition, competition between providers will intensify. The entry of alternative capital providers, such as pension funds and investment foundations, into the mortgage market should also ensure that interest rates do not rise further, especially with smooth financing.