Mortgage costs rise sharply on Middle East conflict

{"text":[[{"start":13.2,"text":"Mortgage costs across Europe and North America have risen sharply as the economic impact of the Middle East war spills into housing markets, piling pressure on borrowers wanting to buy a new home or refinance."}],[{"start":26.299999999999997,"text":"The jump has come even though central banks have refrained from raising interest rates. Mortgage lenders are responding to increases in governments’ borrowing costs and betting that official rates will eventually need to rise to contain the threat of inflation."}],[{"start":41.5,"text":"In the US, the conflict has driven the 30-year mortgage rate to 6.36 per cent, above levels seen in September 2025, before the Federal Reserve began a cycle of three quarter-point rate cuts."}],[{"start":54.4,"text":"In the Eurozone, mortgage rates in the region’s largest economy, Germany, have risen about 0.3 percentage points."}],[{"start":62.05,"text":"The interest rate on popular 10-year loans in the country has increased to about 3.6 per cent, according to data from retail mortgage broker Dr Klein, raising annual interest rate costs for a new €350,000 loan by €1,000 to about €13,000."}],[{"start":80.19999999999999,"text":"“Rates have risen sharply within a matter of weeks,” said Florian Pfaffinger, executive at Dr Klein, adding that the moves had “unsettled the market”. He said that some home buyers were rushing to finalise their mortgages ahead of any further increases."}],[{"start":96.29999999999998,"text":"The sharpest rises have been in the UK, where the average quoted rate on a two-year fixed mortgage with a 75 per cent loan-to-value ratio has increased to 5.1 per cent in April from 3.97 per cent at the end of February."}],[{"start":110.54999999999998,"text":"Hina Bhudia, a partner at Knight Frank Finance, said the recent “surge” in interest rates on new fixed-rate loans in the UK had marked “a real hit to people’s buying power”."}],[{"start":121.69999999999999,"text":"In the US, the rise in mortgage rates come as the market was already struggling from a dearth of housing supply before the Middle East conflict began in late February and blockades of the Strait of Hormuz sent oil prices soaring."}],[{"start":135.89999999999998,"text":"“We overbuilt homes before the financial crisis, and then we had a decade of underbuilding,” said Matt Aks, economist at Evercore ISI. “So there’s undersupply, and then more recently we’ve come into a period of high interest rates.”"}],[{"start":149.89999999999998,"text":"The Trump administration has tried to lower mortgage rates using the government-sponsored enterprises Fannie Mae and Freddie Mac to purchase their own bonds, backed by mortgage loans."}],[{"start":160.59999999999997,"text":"But analysts said that the effects of those purchases have since been cancelled out by the war. “The impact has been quickly swamped by other factors,” Aks said."}],[{"start":169.84999999999997,"text":"Bradley Saunders, North America economist at Capital Economics, said the US housing market would struggle “to build any momentum” with mortgage rates stuck above 6 per cent. "}],[{"start":null,"text":"

"}],[{"start":180.59999999999997,"text":"Brian Lewis, a real estate agent at US brokerage Compass, added that many would-be buyers were “making their peace” with the idea that they will not see interest rates on home loans return to the 2 per cent seen during the Covid-19 pandemic “anywhere in their lifetime”. "}],[{"start":196.24999999999997,"text":"Investors and economists believe mortgage rates will rise further if traffic through the Strait of Hormuz, through which a fifth of the world’s oil was previously shipped, remains restricted."}],[{"start":206.89999999999998,"text":"That would eventually force central banks to raise rates to contain price pressures, placing further strain on prospective buyers."}],[{"start":215.39999999999998,"text":"“The risk of a miscalculation between Trump and the Iran leadership is rising,” said John Muellbauer, an economist at Oxford university, adding that an escalation “would drive us into serious stagflation”."}],[{"start":229.2,"text":"Soaring rates will ultimately lead to fewer people purchasing homes, said Knight Frank’s Bhudia."}],[{"start":235.29999999999998,"text":"“We’ll inevitably see a slowing in transaction activity and pressure on house prices as the recent surge in mortgage rates feeds through,” she said. “How much really depends on how long the conflict lasts.”"}],[{"start":255.79999999999998,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779089207_5013.mp3"}