America's housing shortage is a key reason why the benchmark 30-year mortgage rate likely will top 7%, according strategists at BofA Global.
America’s housing shortage and the Federal Reserve’s inflation battle look poised to push the benchmark 30-year mortgage rate above 7%, according strategists at BofA Global.
More than a decade of underbuilding in the U.S. housing sector has been squeezing renters and potential home buyers. Now, analysts at one of Wall Street’s biggest banks see the imbalance as complicating the Fed’s efforts to bring inflation down from a nearly 40-year high. Even though the Fed didn’t create the housing shortage, its rush to increase rates has shocked bond yields and mortgage rates higher. That’s been feeding an acceleration of “owners’ equivalent rent” inflation as home-buyer affordability has collapsed, causing more people compete as renters, the team said.
Investors trying to navigate market turbulence on Monday sold both stocks and bonds, with the benchmark 10-year Treasury yield TMUBMUSD10Y climbing to 3.878% on Monday, its highest rate since 2010, according to Dow Jones Market Data. Yields and bond prices move in opposite directions.
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