Recent data released in US shows that the average 30-year fixed rate mortgage has exceeded 5% for the first time in 10months, rates now stands at 5.05%. To put this into perspective the average monthly cost for $300,000 home loan now stands $1,620 compared to $1,462 just a few months ago.
This has the potential to severely dent US consumer confidence, the consumer being the a primary driver of economic growth given that they contribute up to 70% of the GDP.
Furthermore, a report released by the Federal Reserve a couple of weeks ago, highlighted that the housing market remains "depressed". Adding to these concerns is the number of foreclosures in December, which stood at 2.2m (a record). Add to that rising home prices, which increased by 0.2% in the fourth quarter of 2010, still leaves significant room for improvement in the US housing market.