Mortgage loan: American interest rates exceed 7%

Borrowing rates have surpassed the 7% mark in the United States for the first time since 2022. While the number of available housing units is low, only a price decrease seems to be able to unlock a market that has been stagnant for months. This observation also applies to the French market, despite interest rates being lower than their American counterparts.

Borrowing rates at their highest in 21 years

7.09%. That is now the average rate for a 30-year mortgage loan in the United States according to the real estate refinancing group Freddie Mac. This marks their highest level in over 21 years (since April 2002). The Mortgage Bankers Association even anticipates a rate of 7.16%. This is the direct consequence of the Federal Reserve’s (Fed) latest increase in benchmark interest rates last July, between 5.25% and 5.50%. In 2021, the Fed was lending at rates between 0% and 0.25%, figures that now seem completely outdated. Now, the Fed is even considering further monetary tightening and may require a period of growth below potential growth to avoid stalling future progress on inflation.


The demand for buying houses and apartments is at its lowest since 1995 in the American market. The median price for a house reached $410,000 in June 2023, the second highest price ever recorded in the country. This makes it impossible for many Americans who already own homes to move, as buyers able to finance such properties are becoming increasingly scarce. This phenomenon, alongside low demand, is creating a worrisome supply crisis. This is notably why prices are stagnating or rising again in many regions. Very few homes are available, which is keeping prices high. Home sales reached their lowest point of the year in June 2023 according to the National Association of Realtors.

Moreover, the displayed prices are also affected by the increase in bond yields, which are at their highest level since 2007.


With high prices and constantly rising interest rates… Apart from the level of borrowing rates (around 4% in France for 25 years), the dynamics are relatively similar in France and the United States. On one hand, buyers are trapped between high interest rates – banks are often reluctant to grant loans, which hinders future buyers, especially first-time buyers, in their searches – and prices that are still too high compared to the current state of the market. On the other hand, property owners and landlords do not seem ready yet to lower the selling price of their property sufficiently to adapt to the current situation. As real estate remains the dream of a lifetime for some of them, there is no question of “selling at a discount”.

Nevertheless, some property owners may have no choice but to lower their ambitions in the coming months if they wish to sell their property quickly enough. It’s a tough decision to make, indeed, but it could help unlock a stagnant real estate market that has been in a rut for months, both in the United States and in France. A decrease in property prices, combined with persistently high interest rates, could lead to a certain rebalancing from which both parties would benefit in the short term.

As for France, Minister of Economy Bruno Le Maire spoke on Monday, July 28, and was straightforward on France Inter: “There will be no decrease in interest rates in the coming months,” indicated the Minister of Finance. Therefore, a decrease in prices appears to be the most plausible solution to accessing property in the coming months.

The France leads in financing from the European Investment Bank for climate initiatives

Leave a Comment