Australian Housing Prices Expected to Rise 12% by 2026 Amid Low Interest Rates

Mortgage rates in the U.S. have inched up slightly but remain below 7%, with the 30-year fixed rate mortgage averaging around 6.86% and the 15-year at about 6.01%. These increases are partly attributed to Moody's recent downgrade of the U.S. credit rating, which raised concerns about the government's growing deficit and elevated interest payments, leading to higher Treasury yields that influence mortgage rates. Despite rising rates, mortgage activity remains stable due to increased housing inventory, providing more options for buyers compared to previous years. However, affordability challenges persist amid high home prices and limited inventory, with some forecasts suggesting a slight decline in median home prices this year as buyer demand softens. In Australia, similar affordability pressures are expected, with housing prices projected to rise by up to 12% by 2026 due to strong demand, limited new supply, and recent Reserve Bank interest rate cuts. The Reserve Bank's rate reductions, while easing borrowing costs, may further inflate already expensive housing markets.