Mortgage Rates Rise Above 7%
Mortgage rates just crossed 7% again, and it changes monthly payments fast.
The Big Story
Mortgage rates climbed back above 7% this week after new economic reports showed inflation is still staying higher than expected.
During parts of 2021, many homebuyers locked in rates below 3%. Today, these higher interest rates are making monthly mortgage payments expensive.
The Two Spins
From the Left
More first-time buyers and middle-income families should have access to affordable mortgages and lower borrowing costs.
Government-backed loan programs help make homeownership more reachable.
From the Right
Lending should remain strict so buyers are less likely to take on loans they may struggle to repay later.
Interest rates need to stay higher longer to help slow inflation and prevent another rapid jump in home prices.
What This Means for Us
Higher mortgage rates do not just affect homebuyers. They also impact homeowners with adjustable-rate mortgages and home equity loans tied to changing rates.
Adjustable-rate loans have become more common in the past year and recently made up roughly 10% of new mortgage applications, meaning those homeowners will see payments rise this year.
How They Make Money
Fannie Mae
Originally created during the Great Depression in 1938, Fannie Mae now operates as a shareholder-owned company connected to Wall Street and global markets.
Fannie Mae is a privately owned company that helps keep mortgage money flowing by buying home loans from banks and selling them to investors.
Takeaway
A private company created during the Great Depression still shapes a huge part of today’s U.S. housing market.
The Number That Stuck With Me
$4.3 trillion
Fannie Mae backed around $4.3 trillion in U.S. mortgages last year.
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