(The Center Square) – A group of Democratic senators is calling on the Federal Reserve to cut interest rates as a way of addressing housing affordability.
U.S. Sens. Jacky Rosen, D-Nev., John Hickenlooper, D-Colo., Elizabeth Warren, D-Mass., and Sheldon Whitehouse, D-R.I., sent a letter to Chair Jerome Powell on Monday, just before the Fed is scheduled to meet on Tuesday and Wednesday.
According to the senators, mortgage rates are at 20-year highs following recent interest rate hikes. Rosen noted in a news release that Nevada is the number one state for declining mortgage availability, according to a report from the Mortgage Bankers Association.
“From December 2021 to December 2022, average monthly payments on 30-year fixed-rate mortgages rose from $1,400 to $2,045, a staggering 46% increase,” the senators wrote. “Today, those payments have skyrocketed to $2,883.”
The senators went on to state that even the rental market has been impacted by the Fed’s monetary policy.
“As high costs and interest rates deter prospective first-time home buyers, many families and individuals choose to stay in the rental market,” they said. “However, these households are not guaranteed to find more affordable conditions awaiting them.”
Market-rate rents have seen a decrease in recent months, but the senators said “the price of rent is still astonishingly high” compared to before the COVID-19 pandemic.
“In addition to keeping renters in their units and constricting the supply of new rental units by making construction more expensive, high-interest rates mean higher mortgage rates for landlords, who may pass off these costs in the form of rent hikes for their tenants,” the letter said.
The average interest rate on a 30-year mortgage hit 8% in October 2023 after seven weeks of increases. The rate fell in November and was between 6% and 7% at the start of this month according to The Mortgage Reports.