Mortgage Rates Near 3-Year High as New Housing Law Takes Shape

Rates Climb, Market Feels the Chill

The average interest rate for 30-year, fixed-rate home loans in the United States climbed to 7.38 percent this week, according to Bankrate, approaching a three-year peak. Arthur Sterbcow, a real estate analyst based in New Orleans, said that whenever interest rates rise, the market cools and buyers become more cautious, especially as the cost of living has escalated. He described the current New Orleans market as balanced, a contrast to the pandemic period when mortgage rates fell to 3 percent or even 2 percent and gave sellers a strong advantage. Sterbcow noted that those low rates still shape how both buyers and sellers perceive today's higher borrowing costs.^[S1]

Sterbcow said many homeowners who secured those low rates are now reluctant to sell, because moving would mean taking on a new mortgage at around 7.25 percent or 7.38 percent, which he called sticker shock. Despite the higher rates, homes are still selling in the New Orleans area. Data from the New Orleans Metropolitan Association of Realtors shows that closed sales this year have increased by 6.1 percent and pending sales by 7.2 percent compared with the same period last year.^[S1]

A New Law Targets Affordability and Corporate Buyers

Troy Carter, a Democratic congressman from Louisiana whose district covers sections of the New Orleans metropolitan area and the River Parishes, described mortgage rates and homeowners insurance premiums as unmanageable. He recognized the difficulty many households encounter trying to hold onto a home or purchase one for the first time. This summer, Congress approved the bipartisan 21st Century ROAD to Housing Act, which Carter described as a way to boost the availability of affordable housing. The statute broadens financing avenues for lower-income families and, beginning next year, will bar large corporate investors from buying single-family residences.^[S1]